I've been managing the household budget the same way since I was single and in college. In 1992, after 4 years at a community college (that's another topic for another blog post), I moved away from home and, as a junior in college, I started my first year at Kansas State University in Manhattan, Kansas. I had no vehicle, and I got a job and started working at Wendy's as a part time cook. The apartments I lived in was a 5 minute walk to Wendy's and it was a 2 to 3 mile walk to the campus. The apartments had a commuter bus that would transport the college tenants to the campus several times throughout the day, which is how I got back and forth to the campus.
My first Monday there in Manhattan, Kansas I took a cab to go and apply for food stamps to help me afford food. Less then a week later, I found out I was approved for the government assisted help. So with food money taken care of, I turned my attention to how I was going to manage my money from my weekly Wendy's paychecks, and pay my bills on my own for the first time. I started putting my money for reoccurring expenses, such as miscellaneous household items, laundromat money, and any extras on food and lunch, into separate envelopes to help me organize and discipline myself. Now at this time, I hadn't heard of anyone doing this, but I thought it was a good idea to help me organize myself. So I was sort of using the "envelope system", as famously coined by Dave Ramsey, long before I ever heard of him. That envelope system that I used throughout college, has actually stuck with me!
The second thing I did as soon as I started my junior year at college, was set aside a separate notebook to actually write down my monthly budget, so I could keep track of my bills and exactly what I was spending. Little did I know at the time how incredibly effective both of these things were. I was essentially running my personal finances like a business, without actually realizing what I was doing. I was thinking about income vs. expenditures, cash flow, petty cash, and documenting a monthly plan on paper. What I learned very early on was that I was the author of my money, there was a certain level of control that I had with my money, and the meaning of accountability with my personal finances. I also realized that the only way to manage that money was to know where it was going and record it on a regular recurring basis. It wasn't perfect, and I made my share of mistakes, but the understanding that there was power in disciplining myself around money, was incredibly important, and served me well as I began to learn more, and ultimately earn more.
Today, lo' and behold, 27 years later, I'm still doing the envelope system, and I'm still writing a monthly budget. I actually continued to write the monthly budget by hand until 2018, when I finally moved over to a Google spreadsheet. I realized a long time ago that it's not about how fancy or sophisticated a thing is, but it's about how dedicated you are to it, how disciplined you are with it, and the fact that the execution matters a lot more then anything else. Budgeting has simply become a staple in how we, my wife and I, manage our money and overall finances, on a month to month basis. We create a unique budget every month.
Now that you have some background on how long I've been doing this, let me explain the objective of this blog post. My goal here is to simply give you 10 things that have helped us on our personal finance journey. Hopefully these things will help you understand how important budgeting is, and the fact that it's the mechanism by which you manage your finances, and control money, without allowing the money or the circumstances to control you, that is the most important! Your money is YOUR responsibility. When you budget your money, you empower yourself because you are taking ownership over your money.
Now If what you are currently doing is working for you, then stick with it. If it's not working for you, then take a look at the rest of this blog post and hopefully something in it will resonate with you, and you can give it a try and plug it into your process of managing your household finances.
So here are 10 helpful ideas that have helped us:.
1. Give to Others - We are faithful tithe givers and believers in giving to causes besides our own. At the top of every budget we've written "Tithes" since 2001. God operates by a set of principles. One of those principles is that you will never go broke as long as you are giving and helping others. We believe that every human being on this earth has an obligation to give, to help, and to do something for the good of others. One of the ways we put this into action is through our tithes, and giving to our church, among other charitable donations.
2. Give to Yourself - invest in YOU! Don't let a paycheck, a month, or a windfall of money, ever go by without taking care of your future self. Sounds like a cliche, but its the absolute truth. Every time you get paid, put money aside in your work retirement accounts, mutual funds, index funds, or some form of investment that typically increases in value. This should be either an automatic withdrawal out of your account where it doesn't necessarily have to be reflected on your written budget, or it needs to be written on your budget and done through after some type of investment vehicle. The best person to take care of the old you is the young you!
3. Joint Effort - If it's just you, get a budgeting philosophy and get on A PAGE. If it's you and a spouse, you all need to get common budgeting philosophy and get on THE SAME PAGE. I can tell you now, if you aren't on the same page with your loved one, budgeting will not be very effective. You have to be in agreement, as much as possible, in order to make anything work with money. i can't stress how important this is. It's about accountability, rowing in the same direction, sharing goals, and growing together. Again, if you are single, this one doesn't apply so much to you. But if you have a spouse, or a loved one, this may be the single most important tip for you all. Once you get on the same page, anything is possible with money!
4. Discipline and Focus - Be organized and consistent. Don't be afraid to wear blinders when dealing with your money. The more fanatical with your discipline and focus, the more others will talk about you, laugh at you, and wonder about you out loud. They will call you "cheap" and other mean words. My answer to that is "so what"! People that talk like that are usually broke and out of control with their money. You have to be so disciplined and focused with your money that you welcome it when others will talk about you. Let them talk. When you get disciplined and focused with money, you will be happier with money, but you have to learn how to turn a blind ear to the naysayers. Set aside a specific time each week, every 2 weeks, or, at least, once a month, to write your budget, review your budget, and plan. Develop goals around your money and focus your energy, time, efforts, and cash flow, towards those goals. Be laser like in your focus. I'm not saying you can't have fun with money. I'm saying, be in control of that fun! When you are disciplined with the budgeting process and focused with your money, and on your goals for your money, you will notice that you have less stress.
5. Tell YOUR Money Where to Go and What to Do - Be assertive and firm with your money! Push it around, direct it, control it, move it where you need or want it to move to, and be the boss of it. Allocate and earmark expenditures. If you want a new couch or a pair of shoes, budget for it. Fit it into your budget. Don't just "wing it" and hope the chips, and the "bills", just fall where they may. "Control" is not a bad word! If there was ever a time when you want to take control, it's with your money.
Stop being intimidated and pushed around by your paycheck. If you have to lower some of your expenses to gain control of your money, do that. Cut the cable, start couponing, spend a year not going on vacation, or simply stop grabbing a latte every morning on your way to work. Telling your money what to do and controlling your money could entail simply managing and cutting your expenses. Everyone's situation is different, but you have got to be comfortable taking a deep look at your situation and attacking it head on, and in an aggressive manner.
6. Address Debt - If you aren't out of debt, get a plan together to get out of debt. I don't care what "get outta debt" guru you follow. Follow me www.smartmoneybro.com, follow Dave Ramsey https://www.youtube.com/user/DaveRamseyShow, or follow His and Her money on YouTube https://www.youtube.com/user/HisandHerMoney. It doesn't matter. But as you budget your money, you need to prioritize somewhere in your budget the practice of paying off your debt. If you simply don't care about debt, then that is your choice of course. However, discipline and a budget will always lead to extra money. Why not take that extra money and put it on debt? That's a different topic for a different blog post, but a good budget is synonymous with a focus on debt reduction. That's just "smart money bro". Shameless plug!
7. Have Regular Budget Meetings - You have to get organized and fanatical about paying attention to budgeting and your personal finances. If you are single, have the meeting with just yourself. I'm serious. In our case, we work together. For a long time I managed the entire process. That was overwhelming and was not the best case scenario. So getting to the point where we work together has taken us some time and we've had our struggles with this one. In the past year, we've gotten to the point that my wife writes the bills and manages the checkbook, and I write the budget. She's more detailed with the numbers than I am and it's more of her strength. I'm more of a big picture person that doesn't care much for the "down to the penny" budgeting. Its working. It forces us to talk about our finances more, and share the responsibility, and that type of "joint" accountability matters!
8. Prioritize and Prepare - Your bills don't change much from month to month. There are certain mainstays that simply are fixed expenses. Then there are expenses that vary from month to month. Your focus every month should be identifying those things that come up that are not always expected, which typically changes from month to month. This is why every budget is not going to be the exact same. Creating a different budget for each month is every important. Perhaps there is a wedding gift to get, a baby shower gift to get, a traffic ticket that needs to be paid, or things like that. Every month, prioritize those extras and save up monthly for those regularly occurring big items that occur yearly. Put a little aside each month. Christmas always occurs December 25th. the homeowner's association dues are always due on January 1, and so on and so forth. Again, prioritize monthly, and add to those big items a little at a time each month so that they aren't a surprise expenditure when they are due.
9. Stay Focused - Get some goals with your money and stick to the necessary action steps, in your budget, to help you reach those goals. The key here is ONE GOAL AT A TIME. Have that laser like focus and activate the budget to help you accomplish it. Our goal is to get our daught through college debt free, so a bunch of our focus is on ensuring her monthly expenses so she doesn't start life with debt. So we pinpoint a large portion of our monthly budget towards that goal. Anything extra we throw at the debt. The point here is to stay focused. Don't quit. Don't give up. Don't waiver. Don't forget to budget. Make it a point and a habit to plan and create your unique monthly budget.
10. Write it down or Type it in - We use a spreadsheet, but again, you can certainly write it down by hand if you want to. This doesn't have to be fancy or glamorous. Just like many of you reading this, I don't care to add another fancy app to my phone, or care to add any fancy software to my computer. I have a gmail account so I have access to Google docs. I use a simple spreadsheet. The most important thing is the follow-through and the wherewithal to stick with the plan you put on paper. Revisit it in between budget meetings. Keep it in a place that you can get to easily and quickly. My budget is on my phone and accessible on my computer, which I use daily. Each month has a different tab and it's done. Nothing fancy. Keep it simple, but record it, write it, and follow it.
Hopefully there is something here that you can take away and implement in your budgeting, or your quest to manage your personal finances.
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