Budgeting has a bad rap. It’s seen as a way to hinder fun and limit spending. These are misconceptions about budgeting! Budgeting can be a useful tool to actually allow you to spend more money on clothes, or vacations, or wine—whatever catches your fancy. Here are some ways to get your budget to work for you.
Budgets aren’t written in stone
Unlike the 10 Commandments your budget should not be written in stone and you should be prepared to change them as needed. Every month is likely to be different for you—one month you’re getting ready for “Back to School” and another month you’re having in-laws stay for a week. Each month you should be prepared to change your budget. There are some expenses that will stay the same—mortgages, cell phone bill, insurance charges—but other expenses will fluctuate based on what you have going on that month. If you know you’re taking a cross country trip to Yellowstone National Park you should plan to spend a little more money on gas that you may have the month before. Speaking of planning…
Set some money aside for an emergency fund
S#!7 happens! And it happens at the worst possible time it seems. Make sure you set some money aside in an emergency fund. Some experts suggest 3 months expenses others suggest 6 months expenses in cash ready to go. I’m really risk adverse and have a separate savings account with a little over 6 months spending in that account.
The traditional phrase for credit cards of “use them only in emergency” only work if you have money to cover those when the bill comes. It’s a better idea to have money ready to go if you blow a tire. Don’t be afraid to use your emergency fund—that’s what it’s there for! If you need to spend some money to buy a fridge when yours breaks over the next several months put a new category in your monthly budget to build your savings back up. One thing you need to decide as a family is when and what is a good use of the emergency fund.
Christmas isn’t an emergency
What I mean by this is that we know every year Christmas comes around on December 25th. It is not a surprise and therefore you can and should plan for it. My family has a ton of December birthdays (Father-in-law, Mother-in-law, Brother-in-law, myself, and another brother-in-law—technically he’s Jan. 1st but that counts! There are also about 4 more cousins and aunts/uncles in the family with December birthdays). So when I plan out the budget for December I make sure to include birthday and many Christmas presents in the budget. These birthdays and holidays are the same each year allowing for easy planning. Keep big events in mind and make sure you include them in your budget.
Remember that your budget should change each month so one month “Jamie’s Birthday” is a category and the other 11 months out of the year it isn’t (although it should be because I LOVE presents!).
Make sure you add in your “fun” money
Budgets are such a bad word—people have a perception that budgeting doesn’t allow them to go shopping or have a latte with their girlfriend. In fact, the exact opposite is true. Budgeting gives you the power to spend money in whatever way you want. I’m sure you’ve read all sorts of ways to start saving money. One way is often to stop buying the daily coffee. Personally I think if you want to buy the coffee every day go for it! Just budget for it.
I like to go shopping so each month I put some money aside to spend anyway that I want (clothes, shoes, lipsense, Broadway season tickets, whatever!). I don’t shop every month so the money I set aside accumulates each month so that when I want to go shopping I can do it guilt free. If you want to drink a latte every day, do it! Put that in your budget. It may mean you have to trim elsewhere but that is your choice. Keep your fun money in your budget.
Budgeting mistakes happen
Budgeting mistakes happen. It does not mean you failed and should give up budgeting. Maybe you forgot to plan for the 4th of July neighborhood BBQ this year and spent $100 more than you planned in your grocery budget. It’s ok—it happens. Readjust your spending and get back to it next month. Make sure your plan is realistic. I have read many articles about how to feed a family for $100 a month. If that is not something you can or want to do then be realistic and set a better goal for you and your family.
Ultimately, budgeting can give you the power and freedom to put your hard-earned money to good use. There are many budgeting tools out there—check with your bank or credit union’s website. Here’s First National Bank’s Expense worksheet: https://www.firstnational.com/util/calculators/budgeting/monthly-expenses.fhtml. UNO offers an interactive budget worksheet through their MavCents Program. We hear a lot of rules but you need to make sure they work for you. Don’t give up the fun! With a little planning you can be a successful budgeter too!