We often hear about cases like this…
My family follows a strict monthly budget. My husband and I have worked out a spending plan that works well for us and our three children through our years together. We have certainly made our share of money blunders along the way because finding the exact budget structure for a family is often a sequence of trials and errors. I’d like to share some of these mistakes with you, so you don’t end up in the same boat:
- Not Basing Our Budget on Reality
We once cut our food budget in half in order to save $200 per month towards our children’s college education. Naturally, we came up short each month. Any budget must first be realistic before it can actually work. The better plan would have been to track our expenses for a few months and root out some of our money leaks, such as the cup of coffee my husband buys on his way to work every morning or the magazines I always feel compelled to purchase as I pay for the groceries.
- Not Budgeting for Savings
At first, we just saved whatever was left over after other expenses had been paid. Many months, this figure was close to zero. We should have been budgeting for savings just like any other expense or income. That way, we wouldn’t have had to live with a tarp on our roof and no electricity while our insurance went up after Hurricane Ivan in 2004. Nowadays, we save 10 percent of our income, so our rainy day fund is always intact.
- Not Writing Down and Defining our Budget
Budgeting sounded great when we were calculating the options for both our incomes in our heads, but until we wrote it down on paper, it was hard to make these ideas come to life and start to improve our financial health. Actually, was only when I signed up with a budget calendar (calendarbudget.com) that our spending plan became easy to follow.
- Leaving out Gifts
One of the things we forgot to include when we just started our family budget was birthday and Christmas gifts. It’s important to include a “gift” category in any budget, and assign a dollar amount that you can stick to. We also host small birthday parties for each of our three children each year. This is now a part of our “entertainment” budget, and it includes the cost of things like cakes and decorations.
Our family budget is now firmly in place and is working well for us. What about you, how has your life been changed by implementing a budget within your household?