Families usually have favorite restaurants, movies, and even special songs that reflect the character and tastes of the family. Your budget will be just as unique as your family. It will be based on variable factors, such as your family’s size, geographical location, debt load, and income.
When Bob and I first set up a budget, we realized that both of us wanted to have healthy finances, even though we approached money differently. As you go through the sometimes-painful process of establishing and sticking to a family budget, it is important to make a real commitment to these important issues. We also realized that we didn’t need to go overboard by pinching our pennies so tightly that it strained our relationship and took all the enjoyment out of life. So we allowed for an occasional indulgence, implemented budget-cutting techniques slowly, and modified our plan as needed. As time went on, we fine-tuned some aspects of our budget and then did an annual check-up to make adjustments that allowed the budget to become a part of our lifestyle.
There are a few problems that can throw your budget off in a matter of seconds, sending it toward disaster. Here are a few tips to avoid these common pitfalls, and a few reminders to keep trekking at this budget thing:
Debt or Credit
You may choose to adopt a cash-only policy when it comes to your budget, setting up an envelope system where you place the budgeted amount of cash in envelopes marked “food,” “entertainment,” “gas,” and so on. When the money runs out, you stop spending until the end of the allotted period (generally one to two weeks, depending upon how you are paid). A regular peek at the amount of cash left in each envelope is a vivid reminder of your budget commitment. If credit has become a habit, then you might even do something drastic, like cut up your credit cards.
Nothing busts a budget like impulse buying. If this is an area where you struggle, it’s important to be proactive and address the issue before you take action. If you don’t drive to the mall and go to your favorite department store, you won’t be as likely to spend unbudgeted money. So determine to practice the habits you’ve been learning every day so you will have to internal motivation needed the next time you are tempted.
Many couples indulge in comfort spending on clothes, sports equipment, expensive restaurants, and excessive entertainment, to name a few. This unhealthy habit of throwing caution to the wind just to live in the “now” is a budget buster that will keep you living in debt. However, most of us do not reform our unhealthy habits overnight. At the very least, begin to modify and become more intentional about these comfort indulgences. Even cutting back on some of this kind of spending can add up positively.
Think about the gifts you buy for relatives, teachers, baby showers, weddings, birthdays, Valentine’s Day, Mother’s Day, Father’s Day, kids’ birthdays, and anniversaries. This doesn’t even cover the biggie: Christmas. The first ting we should do is evaluate the “why” of gift-giving. Do we really have to give a material gift in each circumstance? Wouldn’t a card work just as well in some cases? What about baked goods or homemade gifts found on Pinterest instead? Occasionally, giving a gift may put the receiver under a sense of obligation. Think through each of these gifts to put them into perspective and manage your budget at the same time.
As much as an extravagant vacation on a tropical island or a romantic getaway to Europe may seem like a dream, it can turn into a nightmare for a budget when you get the credit card statement. The joy of a week away is often long forgotten while the monthly stress of the remaining debt may linger for more than a year. Some advance planning can salvage the concept of a dream while keeping it from becoming another budget buster. Too often, people fail to consider more than the big costs of travel and accommodations. But everything adds up… and quickly. Count the cost and consider vacations that can give you the fun, opportunity, and relaxation you desire. Sign up for www.travelzoo.com email notifications to keep an eye out for a good deal. Come up with creative ideas for souvenirs, like match books, hotel key cards, playing cards, etc., so you can save on the little things as well.
America’s Family Financial Expert (R)