Got Budget? (Part 1 of 2)
When it comes to organizing your finances, I am not a certified financial expert nor claim to be an expert with money. I do however have a keen since of how to budget and plan ahead and have used varies systems over the years. For some organizing a budget is too overwhelming and not something they would stick to even if they did create one.
Recently, I attended a Dave Ramsey event with my husband and two of my sons. With my teens voicing their protest to a boring 5 hour seminar on debt and finances, I insisted they go and warned them of the impending discipline if they had an ill attitude. The fact is they were pleasantly surprised. They laughed, took notes and one even said, “I learned what a Mutual Fund is now”…something I think most teenagers have no clue about.
I wanted my boys to see the importance of living debt free and the downfalls of using a credit card. The event was not just for teens but for the many adults that wish to get out of debt and use a system for managing their money.
One statement that plays over and over in my mind that Mr. Ramsey said was, “Live like no one else, so you can live like no one else.” This may mean driving an older car, or living in a smaller house, or doing without some luxuries… so you can live like no one else one day.
For the sake of writing a short novel I have divided this blog into two parts. This post will talk about a few systems for managing money and the ground rules that need to be in place before starting a budget. First a system does not have to be complicated nor does it have to be time consuming. There are some free and low cost online money management tools available or you can use Excel to create a simple spread sheet for your budget.
When organizing and paying bills there is usually one person that needs to be primarily responsible for the household bills. If two people are paying bills the chance is greater for lost communication, not to mention each might be following their own plan or budget. So first decide on who is in charge of overseeing the day to day bills and then work on a budget together.
Working on a budget together lets both parties see how much there really is or is not to work with and eliminates any claim to unfairness when it comes to who is getting more to spend.
Next, the second thing you need to do is figure out what are your bill paying schedule, this is usually based on your paydays. Do you pay bills every other Friday or the 15th and the end of each month? Next decide what bills get paid on what bill paying schedule. In our household our mortgage gets taken out of our 15th of the month payday and our gasoline money for our cars comes out at the end of the month.
After you have each of your bills designated to a specific pay day then total up each column of bills. The total of each column should be no more than your actual income earned for that pay period. If it’s over adjust , moving a bill to another pay day or reducing the amount you are spend for a particular category. For example, if I make $2000 bring home on a payday but I have $2500 in bills due; I would take $500 worth of my bills and move them to the end of the month. Well, you may say Lorraine; they would be late by then. Well, I have already thought of that. The key is to pay them at the end of the month before they are due; just as I do my mortgage payment. As mentioned above I pay my mortgage on the 15th of each month but it’s not due until the 30th of each month. So what, that they bank gets it two weeks early. It works for my budget and that is what matters. This may take some time to get your bills organized in such a way but it works.
Lastly, for bills that don’t come every month like car tags, birthday gifts, haircuts and doctors co-pays consider keeping what I call a Bill Escrow account. The easiest way to do this is to open a second checking account that has no fees associated with it and that you are able to easily transfer money back and forth from your primary checking to this 2nd checking. Add up all your bills irregular bills for the entire year and divide by 12 for the months of the year. This is how much you will want to put in your budget each month for your Bill Escrow.
For example, I have $350 dollars each month that gets taken out of my checking and placed in my 2nd checking. It stays there until a bill or expense comes for one of those irregular bills. It might be paying my car insurance for the entire six month premium instead of paying a monthly service charge. Or it might be saving a little each month for Christmas all year, rather than budgeting it all at once in the month of December.
The idea here is to try your best to anticipate what is coming and plan accordingly. The charge card probably looks pretty good when the kids clothing looks like they are waiting on a flood because you failed to budget school clothes….so you whip out that credit card and CHARGE IT. It would have been best to schedule buying school clothes in your monthly budget just like a yearly bill.
I know this post is quite long this month but let me assure you I’m not done yet. Well, I am done for this post but come back next month in November for lots or resources on what to use.
Lorraine Brock is a professional organizer, family coach, speaker, and founder and owner of “Get Organized!” “Get Organized!” is a professional organizing company in the Dallas, Texas area. “Get Organized!” specializes in organizing and de-cluttering homes as well as implementing systems in the home for better family management.
A popular media guest, Lorraine has appeared on Dallas’ two top morning television shows: Good Morning Texas and Good Day Fox, and has been featured on various radio outlets. She has been hallmarked in many local, regional, and national print and online magazines, such as the Dallas Morning News, The North Texas Kids Magazine, SheKnows.com, and Daily Candy Kids. To get more information about Lorraine, visit www.GetOrganized.ws.