Winning With Your Monthly Budget

How many people like going to the dentist to fix a cavity?  Most people do not enjoy it.  I do not like going.  The reason I do go to the dentist is because I know that the short term discomfort or pain will have long term benefits. 

It is the same about writing a monthly budget.  It might be annoying, or even unpleasant, but it has many long term benefits. The monthly budget is one of the most important steps in the financial planning process. 

John Maxwell said; “A written budget tells your money where to go, instead of wondering where it went.”  When done correctly, it gives families a focus and a blueprint on what is happening to their finances now and in the future.  Start today by setting clear goals with your personal finances by making a monthly budget. 

Here are seven strategies for individuals and families to make the monthly budget work more effectively.  

1.  First thing, you must write it down on paper, not just in your head.  Give every dollar a name. 

2. Understand that this is a process and that it usually takes about 3-4 months to get a budget to work properly.  The first month you will make mistakes and be off in several categories, especially food.  It is usually after the first month or two that most people give up, instead of coming together and working on fine tuning their budget.

3. The first thing you should spend on paper is the four walls of protection. They are shelter, food, transportation, and clothing.  After they are taking care of, then you can plan to spend on the other expenses. 

4.  Use an envelope system for expenses that tend to get out of control like grocery, entertainment, or fun money.

5.  If married, one person should prepare the written budget and then let the spouse make adjustments to it.  An effective budget will only work when the husband and wife each have some ownership in the creation of it.

6.  If money is tight, couples should agree together on what luxury items like restaurant, gifts, or vacations will get reduced or eliminated this month.

7.  Read books like The Total Money Makeover or search the web for insightful articles to help guide you in creating the best budget for your family.

Next article we will look at the range of percents that each money category should be and continue to offer suggestions to help you win with your finances.  I love this quote from Eleanor Roosevelt that says, “It takes as much time and energy to wish as it does to plan.” So go ahead and write down on paper your monthly budget.  Let me know what you do each month to effectively plan how to budget your money.  You can email me at ed@finnertyfinancialcoaching.com.  Everyone who submits a comment will be entered into a January raffle for some valuable resources.

Ed Finnerty

Finnerty Financial Coaching