Why budgets don't work and how to fix it
|Terry Rigg is the editor of the Budget Stretcher Newsletter. The
Budget Stretcher Newsletter is published monthly and is loaded with
information that will save you time and money everyday. Go to
http://www.homemoneyhelp.com for more information.
This article is for those families
that have sat down at a desk or the kitchen table time after time
trying to develop a family budget that they can live with.
Why don't they work?
There are several answers to that
question. Most budgets are doomed from day one because they are too
complicated, don't have the commitment of all involved, or the
numbers simply don't add up. The biggest culprit is that most people
don't allow for unexpected expenses.
Let's tackle these one at a time:
Too Complicated: When you list
every expense you have on your budget you set yourself up for
defeat. Some budgets include such things as cleaning supplies, dog
food, haircuts and car gas. In order to keep track of all of these
you would need a new box of envelopes every month.
Answer: Streamline your
budget. By simply including a topic on your budget entitled
"Household" where you can include everything you spend
money on each month, excluding bills. Groceries will undoubtedly be
the largest expense in this category. By taking the extra time to
figure what needs to go into your household budget when you set it
up, you can save a lot of time each payday.
|| Many times the commitment to live
by a budget is lacking.
|| People get into spending habits that are hard to break.
|| There is constant friction in the family over money.
|| It is more comfortable to live beyond your means.
Answer: You have to consider
all of the above problems when setting up your budget. The Family
Budget is just that, the FAMILY BUDGET. Everyone in the family that
is old enough to count should be included. I don't mean to say that
children should have a say in where the money goes, but they should
be aware of what the spending limits of the family are. If you work
closely with your spouse in developing a family budget you both are
more likely to stick to it. There is one other detail that will
help. By setting aside money for yourself and your spouse, that you
don't have to account to the other for, your budget is more likely
The Numbers Don't Add Up: You
have more budget than you have paycheck. Generally, this is caused
by not being realistic in your budget. You try to make your paycheck
fit your budget.
Answer: Start by listing your
household expenses and bills. Then include 10% of your income for
long and short term savings. If this total is more than your
paycheck, you have to cut back. Start by looking at your household
budget. Are there items that you can do without? If you have money
left over after considering all of the above, then increase your
Unexpected Expenses: This can
be from your car breaking down, needing a new washer, or any number of
other expenses that you can't predict.
Answer: While long term
savings is for things such as a home or car purchase or college for
the kids, short term savings is just as vital to your financial
security. A short term savings will accomplish two things. It will
provide you with the money you need to pay those unexpected expenses
and it will cut down on the use of credit cards. The short term
savings could save you hundreds of dollars a year.
When you develop your budget, keep
the following things in mind:
|| Make your budget as simple as
|| Get the family involved.
|| Make your budget fit your paycheck, not the other way around.
|| Plan for the unexpected.
|| Visit The Complete Budget and Bill Organizer see the above link
for more details.