In our home, we talk a lot about budgeting and money. Although it is commonplace around here, I have not always been used to this. Growing up, we didn’t discuss money much. Money was something we kept to ourselves. My parents taught us the basics of money management – to not spend more than we earn and be generous. It wasn’t until college that I sat down and made a budget.
My first budget was simple. At the time, I had two accounts – one to save and one to check. I had two part-time positions – one at home and one on campus. I held both jobs from my high school days. My first budget was driven by my desire to avoid overspending on campus. At the time, my biggest expenses were textbooks and time spent with friends. The spreadsheet was simple, but helped me to understand the importance in having a budget. I did not only want to save money to pay back my student loans, I also wanted to avoid overspending.
The way I make decisions for my family is a bit different since Hubs and I are now involved. However, the basic principles are still the same. Today, I will share the top five reasons why we are so adamant that create a budget in our family. I hope that you, if you don’t already have one, will think about creating one. If you already have a plan, I hope that this will encourage you to keep it up to date.Why Budgeting is Important
Budgeting allows us to manage our resources well.
A budget is a good way to start managing your finances. One of my favorite articles about creating a budget is from Forbes Magazine: Why Do You Need a Budget? We want to use the money we have been given wisely. Your budget is a reflection of your priorities, I have heard this before. If you want to know what someone is worth, look at their bank account (or transaction history). A budget allows us to determine our priorities, and then allocate our resources in accordance with them. A budget allows us to predetermine the amount of money we will spend on a certain item and proceed accordingly. We can also identify areas that we should cut back on, or allocate more money to based on our top priorities.
Budgeting helps us to set realistic goals, and create a plan to achieve them.
We began setting goals early in our marriage. We set goals to travel, buy our first house, pay off student loans, or purchase a new car (for us). We started to make a list of the things we wanted to achieve and the steps that we needed to take. We decided that it was important for our family to have a plan in case one of us lost their job or if we wanted to keep one of our children at home. Both of these things have occurred, although they happened in different years.
A budget helps us plan realistically how much we can save each month for each of our goals. It allows us to plan more realistically for our goals, and for how long we will need to save. You can see the progress you make over time if you set a realistic timeline for your goals.
Budgeting makes us more accountable
A budget helps us to be accountable for our decisions. we track each dollar spent and categorize all our purchases (groceries and mortgages, personal and home expenses, etc.). This way, our spending habits are not a secret. You can check your budget at any time to see where you stand in each category. It forces us to take full responsibility for every financial decision we make.
Budgeting helps us to make quick decisions
This is something I can’t stress enough. A budget simplifies the conversation about “Can we afford that?” We have a budget that has given us an idea of what we can afford, and how to motivate ourselves towards achieving our goals. This means that in my day-to-day life, I don’t feel guilty if I have a latte at the last minute because I already know how much money I’ve allocated to personal expenses. I also know how much I spent on a particular month. We can also spend less time worrying about the purchases we cannot make at any given time. If we know something isn’t in our budget, the question “Should i buy this?” is answered.
Budgeting helps to protect marriages and foster a healthy relationship between parents & children.
We budget to maintain a strong marriage and to create a good relationship between our children and money. This is a HUGE one for me. We want to do all we can to prevent financial arguments from being the main cause of disagreements and fighting between couples. We are both different people, with different preferences and habits. We can stay on the same page with our finances by creating a joint budget and talking frequently about our goals.
Our children will also benefit from this team-player approach to budgeting. We foster a healthy relationship to money by being willing to talk about our goals and make adjustments as necessary. We celebrate our wins and make cuts together when necessary, because we are working as a team on our budget. Hubs and myself both contribute to a budget, which is crucial for a budget that’s effective and prevents arguments at home.