Budgeting 101- Part 1

Budgeting 101- Part 1
Why Budget & Setting Your Dreams

I'm going to begin a series on the #1 most requested session in our financial counseling appointments- budgeting. Creating a realistic and well designed budget is the key to financial empowerment.

I must confess that I have not always seen budgets as "empowering." When my husband and I were first married, we were polar opposites. I kept a balanced checkbook register but spent whatever I wanted until the money ran out. He, on the other hand, advocated for a family budget. I kicked and screamed.... and then some more when he suggested we should adopt a family spending plan. I didn't want to use a budget when there was money in the bank. And why since I'd never had a problem before! But, my attitude has since drastically changed... yes honey if you are reading this I was wrong. There, I said it!

Experts say that money issues are the #1 cause of divorce in America. With over 50% of all marriages now ending in divorce, I guess we still have a lot to learn about financial management. I found freedom in creating a family spending plan since I found it brought my marriage an entire family on the same page. Here's a few ideas of why I think you should consider a family spending plan also:

  1. Budgets are a way to reflect your dreams and deepest desires. What do you dream about? Do you desire to own your own home? Pay off your existing home? Pay off debt? Put your children through college? Travel the world? Retire? The personal goals we have cost something, whether physically or financially! When we put our money toward our personal goals, we make progress and that feels awesome.
  2. Budgets help to keep us from making boneheaded decisions. Boneheaded is the term my grandmother used to use when us kids did something really stupid or if we were being particularly stubborn. Having a budget helps us to plan intelligently instead of making impulse buys and buying "great deals that just couldn't be passed up". Having a plan doesn't mean you can't have nice things. It simply suggests that you think about things first, before you buy.
  3. Budgets can reveal imbalances in our lives. Think about it.. how much do you spend on eating out? A smoking addiction? Or even the soft drink machine at work? I heard a pastor say once that you could look at the last five entries of your check register (nowadays it would be more like the last five credit card swipes) to see where your priorities are. Hmm... do you spend more on cable than savings or your nails than groceries. A budget gives a snapshot that doesn't lie about what's going on with our wallets.
  4. Budgets can provide a source of restraint. Okay, so if I'm honest I think one of the reasons that I did not want a budget was because I liked to shop- a lot! It was fun, a way to unwind, spend time with the girls, yeah, yeah, yeah. My favorite was even shopping for great deals, it's just that I would find a great deal and go a little crazy. I still remember the look of horror on my husband's face when I explained to him that all of the women in my family got up at 5 am the day after Christmas for 50-75% holiday items. He was even more shocked when I returned with nearly 20 shopping bags and $300 worth of purchases in Christmas designs. Needless to say, my favorite holiday pasttime is now a part of the family spending plan in the month of December!

The reality was that I never had to exercise restraint in my shopping. My excuse was that I was saving a bundle. But, the problem was that I had no target amount to spend & drove my poor hubby crazy.


There are a million more reasons why my family uses a budget. Over the next few weeks we'll be discussing how you should go about creating one for yourself that fits both your dreams and your personal family situation. Each of the parts will also include a list of homework tasks. Be sure to complete them all in order and in the entirety.

Your First Assignment

Here's your first bit of homework. Create a dream list by jotting down your top 10 aspirations of things not in your life that you are actively considering. If your married ask you spouse to join you also. You might have lofty goals and that's okay. Let's begin your list of 10 dreams of things that you are actually considering. This might include retiring early, sending your kids to college, private school, starting a new business, taking an international trip next year, etc. These things will be incorporated in the budget that you will soon create so be creative but selective.

Next time we meet on this topic, we'll be talking about what you actually spend now. This is best done at the beginning of the month so you have the rest of the month to consider 10 dreams. Dream on!

Budgeting 101- Part 2 Part 3 Part 4