Mention the word budget to some people and it’s like you uttered a nasty word. I feel the exact opposite. Budgets represent freedom versus restriction to me. And just like Liz does, I believe when you budget properly, you can budget for more, rather than less.
I’ve been a Certified Financial Planner (CFP®) for more than 20 years, and I’ve heard every imaginable reason why budgeting never works. And you know what — they are right. It wasn’t working for them because they were setting themselves up to fail. And unbeknownst to most of my clients, they were also teaching their children to dislike budgets too.
Our children observe how we handle money and will often inherit our money hang-ups, including our distaste for budgeting. Budgets are not the enemy. The lack of knowledge on how we spend our money is. The right budget can help you create the life you want for you and your family. And that is something you would proud to have your kids emulate.
2 Keys to Building Your Perfect Budget
Follow these two simple steps to create a budget that works with you, not against you.
#1: Don’t Make Your Budget Too Complicated
There seems to be a mistaken perception that in order for a budget to be effective, it must be complicated. This is simply not true. In fact, there is no one-size fits all budget, but there is one that is right for you. Many people set themselves up to fail from the get-go by creating an overly complicated budget that isn’t sustainable long-term. Ultimately, you may take bits and pieces of different budgets to create your own hybrid version. Do your research and try different methods until you find or create one that you will follow and keeps you honest (i.e. no overspending).
Success Tip: People have a tendency to get very rigid in their budgets. The one thing I know for sure is that no two months are a like. Even if every bill is the same, your day-to-day expenses are more likely to fluctuate month-to-month. So plan for those months where you have six birthday gifts to buy, etc. by giving yourself ample cushion. Once you know your preferred method for tracking your spending, now you can take a few minutes at the beginning of every month (or week) to review any additional expenses and adjust your budget accordingly. Otherwise, you can set yourself up to fail again because you didn’t account for one-offs or seasonal expenses.
#2: Know What Your Priorities or Goals Are
This is where it gets fun and the aforementioned budget freedom is created. Money is finite and every month we have regular expenses such as mortgage/rent, utility bills, car insurance, groceries, savings/investing goals etc. This is a good time to review those expenses to make sure you are getting the best prices and spending your money on things you use and value.
Or upon closer inspection, is there another priority or goal that you would rather direct your money towards? Many of my clients discovered that they spent money on low-priority items out of habit or complacency while believing that the things they truly valued were out of reach. Once they saw a clear picture of how they spent their money, they could redirect it to their top priorities. This is how budgets give you freedom. When you know where your money goes, you have the freedom to choose how you spend it. I suggest spending it on the things that matter most.
My girls are 10 and 8 and already have hands-on experience with budgets. While I supervise and offer guidance, they have become quite skilled at how to prioritize and compromise on their wants and needs. They don’t fear or resent budgets but see them as a tool that helps them make good choices. And most importantly, they also understand that you can still have fun, even when you follow a budget. And that is a lesson I will be proud to have my girls pass on to their future children.
Making Money Conversations Fun and Easy
Financial literacy is my passion, and it is easy for me to talk to my girls about money, but I know it’s a struggle for some parents. One easy and fun way to help you start these important conversations and shape how your kids think about money is through my children’s picture books. I’m pleased to offer Budgeting for More readers an exclusive coupon code TOUR3114 for $3.00 off my new book, The Lemonade Stand. Join Lauren and Taylor in their continuing money adventures as they teach their friends, Ryan and Christopher, how easy it is to save, spend and share.
About the Author: Shannon Ryan is a Certified Financial Planner and a Mom on a mission to help busy parents teach their children simple, value-based principles that guide their money decisions and support their long-term financial well-being.
The Lemonade Stand – iPad Mini Giveaway
July 14-31, 2014
Sponsored by The Heavy Purse
Co-hosted by Are Ya Gonna Eat That, Broke Millennial, Budget and The Beach, Budget Blonde, Budgeting for More, Busy Mom Budgets, Cash Cow Couple, Cents and Sensibility, Club Thrifty, Color Me Frugal, Debt Debs, Debt Roundup, Disease Called Debt, Eat Laugh Purr, Enemy of Debt, Eyes on the Dollar, Femme Frugality, Financially Blonde, Frugal Rules, Living Richly Cheaply, Luke 1428, Making Sense of Cents, Money Saving Dude, Monster Piggy Bank, Not Now Mom’s Busy, Reach Financial Independence, Shoeaholic No More, Stacking Benjamins, Tackling Our Debt, The Broke and Beautiful Life, The Finance Girl, The Frugal Farmer, The Random Path, Thrifty Dad, VeegMama and Young Adult Money.
We’re Giving Away an iPad Mini to One Lucky Reader!
Help us celebrate the release of The Lemonade Stand and join Shannon in her mission to increase financial literacy in both children and adults.
“Everyone handles money. Unfortunately, not everyone does it with confidence. Money has long been a taboo topic in many homes, which makes it even harder for parents to know where to start or what to teach. So I created a series of children books to help parents ease into these important conversations. Financial literacy is one of the most loving gifts you can give your children, and I encourage you to make money conversations a priority in your home.”
The giveaway runs from July 14-31, 2014 and is open worldwide.*
* A winner located outside of the United States will receive a cash equivalent prize via PayPal.