Using a Budget

May 18th, 2007  |  Published in Finances, Mormonism  |  2 Comments

The third step of our Family Finance Overview is to use a budget. This is one of my favorite of the five beginning steps to finances, probably because it is one that we have recently implemented in our household. Although financial stress will always arise, having a budget will greatly relieve that stress.

Our first adventures in budgeting were triggered by some exceptionally large medical bills from unexpected complications at our daughter’s birth. We realized that if we wanted to give our daughter the best life possible, we would have to budget.

Make a plan

Dave Ramsey calls this “giving every dollar a name”. I’ve found that it’s best for us to plan out our expenses monthly for our family budget. Our monthly budget is divided into several categories such as rent, gas, etc. We spend every dollar on paper at the beginning of the month, including tithing money and money for savings. Every time we spend money on something it goes into our budget, which then calculates how much money we have remaining. At the end of the month we assess how we did, discuss how to make improvements, and adjust next month’s budget.

Spread out the occasional expenses

We have several expenses that we don’t pay every month, but are too large to be included in a single month’s budget. Our car insurance payment is a good example of this. Since we pay every six months, we divide our total payment by six and put money into the “car insurance fund” every month. This money sits in the bank until it’s time to write the check, and our current total is kept in our budget as well so that we get it in our minds that this money is already spent.

Make room for fun

When my wife and I were about to get married, her bishop suggested that we plan our finances so that we each would have a little money to spend by ourselves, unquestioned by the other. This doesn’t have to be a lot of money, but it can add up as we save for new “toys” or other things.

Do what works for you

We do our budgeting in Google Docs & Spreadsheets so that we can have easy access to it anywhere we have the Internet. Others I know use Quicken, Microsoft Money, or even paper. Everyone has their own style of how to do this, and it’s best to find what works for you. If you won’t use fancy budgeting software, don’t buy it. Be sure to explore others’ ideas of tools to use, but when you find one, make it your own.

Be sure to communicate

As with so many aspects in marriage, be sure to communicate when budgeting. The idea of a budget is to have a plan, not a strict set of guidelines. Be forgiving to yourselves when you spend over your budget, but be ready to make the adjustments necessary and accept the fact that this budget belongs to both of you. Plan it together, and don’t leave it to just one spouse to do all the budgeting. If you’re not married you can ask these same questions of yourself.

Using a budget is hard work, but the rewards are great. It can be fun to track your progress and see how your budget influences your spending habits, and it’s a great way to apply the previous steps mentioned in our
Family Finances Overview series. Use it to get out of debt, and use it to save for the future.

Responses

  1. Better late than never » Above Yourself says:

    July 10th, 2007 at 8:19 am (#)

    […] little things can you sacrifice to make big changes in your future? Do you have a family budget? That’s a sacrifice of just a few 15-minute periods a week to keep it updated after you […]

  2. FeFNet » Blog Archive » Crazy Eights says:

    January 16th, 2008 at 11:35 am (#)

    […] past year: 1. Being a parent is often more fun than it should be. 2. Children do crazy things. 3. It’s easier to be happy when you have a budget 4. I don’t take enough pictures 5. I enjoy having a backyard 6. Playing in the snow is fun 7. […]