The thought of setting up a family budget can be anything but fun. In fact, it can be so overwhelming, a lot of people don’t even bother. A 2013 survey showed two out of three Americans do not have a budget.
If you’re one of the many folks who don’t have a budget, you probably know you need one, but often it’s just too much hassle and you put it off.
Here’s the thing: if you’re tired of living paycheck to paycheck or simply want to get your finances on track, you have to set up a balanced budget.
While I’m no financial guru and I’m certainly not rich, my husband and I have learned how to manage our money with a simple budget. A few years ago, with just one income, we paid off over $25,000 in debt in 3 years. Since then, we’ve stayed debt free aside from our mortgage. The main key, besides hard work and sacrifice, was a budget. It would have been simply impossible to become debt free without this simple tool.
Whether you need to start a budget or you’ve tried unsuccessfully before, here’s a few simple tips you need to hear:
3 Simple Tips for Starting A Successful Budget:
#1 Keep it Simple:
I believe the number one reason why people fail to start a budget or stay on track is because it’s simply too complicated.
You don’t have to use fancy budgeting software.
Don’t get me wrong – there’s some fantastic budgeting tools available (some free, some not), but sometimes those tools are more hassle than help when you’re just getting started. If you’ve unsuccessfully tried to set up a budget before, you might be better off sticking with plain and simple.
Try a basic spreadsheet on Google docs (no formulas required) and note essentials, like income, monthly bills, periodic expenses, extras, etc. Yes, it still requires work, but at least you won’t get stuck with technical difficulties!
If you’re a little more adventurous, you can try something like YNAB (You. Need. A. Budget). YNAB is the online budgeting tool we use and I love how simple it is to maintain and track our progress. It’s not difficult to set up either, which is another plus.
Regardless, whatever method you choose, do something, even if it’s very rough budget. You can’t move forward until you start!
#2 Change Is Okay:
Once you’ve started your budget, you can begin to refine it. It’s okay and good to adjust your budget as you need to.
You’ll almost certainly need to change categories and figures because chances are you’re overspending in some area and/or you simply need to change your budget to keep it realistic.
Plus, stuff changes. Kids grow quickly. There’s everything from medical bills, vehicle repairs, unexpected household expenses, like a new furnace, etc.
When we switched to a gluten-free, dairy-free, corn-free diet last fall, our monthly grocery bill almost tripled. (We had to make some huge adjustments with our budget.)
Changing something doesn’t mean you’ve failed; it’s just part of life.
#3 Budget Everything
One of the biggest mistakes is failing to account for everything in your budget.
When you plan out your budget, it often becomes clear you’re overspending, so you’ll cut back in certain areas so your budget matches up. Great! But sometimes, as you’ll learn later, it’s not realistic to cut back in all of those areas.
Take eating out, for example. You might resolve to not eat out anymore, but if you’re still ordering take-out twice a month because you’re too exhausted to cook after a crazy day, you might need to simply work it into your budget. If there’s no way you can make it work, then you might need to figure other plans, like buying a frozen pizza instead.
If you’re overspending, you need to figure out why. Sometimes it’s simply careless spending that needs to stop, other times, it means your budget needs to be adjusted to include something.
When we got chickens a year ago, we didn’t set aside a separate expense in our budget. Any “chicken” expenses came out of our general “household” fund. As our chickens grew and we doubled the size of our flock, our household fund starting going negative every month. Nate and I realized we needed to add a new category for our chickens and work that into our budget.
Sometimes a new or existing expense simply needs its own category in order to keep a balanced budget.
Hopefully these simple tips have helped make budgeting a little less scary and a little more reasonable for you.
Keep it simple, remember that change is okay, and don’t forget to include everything in your budget.
You can do it!