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The ABC’s of a Budget

Submitted by on September 12, 2013 – 3:10 pmNo Comment

Budgeting Tips

Tips on How to Create a Budget

by Lorraine Brock

I recently met a client to begin a typical organizing job that included helping her organize spaces in her home. My notes told me our focus would be over stuffed closets, mounds of paperwork, and a disastrous kids’ playroom. As I sat and talked with this stay-at-home mom of two small children, I realized that it was not the spaces that needed organizing, but the details of her life she was responsible for, but never adequately taught how to do.

This client had normal questions about how to organize papers, what to keep and what to shred, and what to do with the piles of her kids’ school papers. During our discussion, it became clear to me that her bigger need was for an organized, realistic household budget that she could manage for her family. Her husband gave her money to manage each month divided into basic categories such as groceries, clothing, kids’ entertainment, and miscellaneous (haircuts, etc.). She was also responsible for paying the bills for two of her own credit cards used for purchasing the kids’ clothes when she ran out of cash.

As I asked questions about her credit cards, I found out that she did not know the difference between a debit card and credit card, and that she was charging everything on her credit card instead of paying with available cash. The credit card balance kept growing, and because she did not budget funds for the charges, she used part of her household allowance to pay the minimum on the monthly bill. I could quickly see how this would create financial problems and my client was ready to get it under control before the school year started.

This was a case of the husband giving his wife a monthly allowance and assuming she knew how to manage it. She never learned the basics of budgeting and did the best she could until her failure began affecting other areas of their lives. Because I have seen this before, I did what I always do – I started from scratch and we talked about the process of managing money from the moment she was handed the cash to the point she paid the bill.

If you find yourself in this position, reach out for help and get control of it before another month goes by. While I enjoy using credit cards for the pay later feature, working with cash can really make a difference in staying within your budget. I know credit cards offer points and mileage, but if poor organization causes you to pay interest charges, incur late fees for forgetting to pay your bill, or even worse overextending your budget, then stop using them now. If you are worried about emergencies, you can set up your debit card to accept overdrafts and transfer the money from another account the same day to cover the expense.

How to Create a Realistic Budget

The best way to create a realistic budget is to determine what you spend on average each year in each category. This includes standard categories like food, housing, clothing, and car payments, and ones that kind of sneak in like birthday gifts, haircuts, leisure activities, and car repairs. Think also about months that have extra expenses such as school supplies in August and summer activities like vacations and camps in June or July. Take the average for each category and divide by twelve (12) months. When each month begins, take the designated amount in each category and place it in a marked envelopes. Some categories will be drawn from each month, and others may not be touched until a specific time of year. These decisions may require a meeting with your spouse or doing some research in your paper or digital files.

Another important financial responsibility that can create a more organized household is an overall knowledge of accounts and accessibility. Formulate a list of all your accounts and include names on accounts, account numbers, person in charge of managing the account, and any passwords or pins needed to access funds. Make sure both parties know where all important documents are located and disclose contents of a Safety Deposit Box. When an emergency happens, you need to be prepared.

Meeting with this client reminded me that it is vitally important that families carefully plan realistic household budgets and that both parties understand how the budget will be managed and who will be responsible for making it happen. Planning ahead will be one of the most important things you do to help keep you organized and your family prepared year after year.

 

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.

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