The next year’s budget is based on the success of the previous year’s goals and any major purchases that we are planning for in the next year. One of the tricks I have learn over the years is to talk about money with everyone before creating the budget – so that everyone feels included and has their chance to give their input.
Get Everyone Involved
The entire family is involved as I ask my wife and kids what they are planning to do next year. This gets all of us taking about the next year and thinking about what we are all planning to purchase. The kids may need a new bike or 4-wheeler or dresser or whatever. I have them create a list of things that they may want to purchase in the next year. My wife may want a newer vehicle or a new TV or a 2-week vacation. I put all the ideas together and we talk about them so that I can gauge the likelihood of how many of these items we will actually purchase.
After I have created the budget, we do our best to follow our plans. When I started creating our family budget, my wife and I were in college and didn’t have much money to spare. At that time, with little money in reserve, we followed our budget very closely. Over the years, as our money in reserve grew, the budget became more of a guideline – as it is today. I still create a realistic budget that we come very close to every year, but it’s not a big deal if we miss our goals because of our reserves.
Open Checkbook Policy
Another trick I have learned is to avoid letting anyone think that the budget is controlling them. For some people, even the word ‘budget’ stirs up feelings of resentment as they don’t want anything or anyone telling them how they can or cannot spend their money. In fact, this is perhaps the biggest reason people avoid budgets.
When creating a budget, the most important person to communicate with is your spouse. Talking with my wife about what purchases are most important to her is the most valuable investments a husband can make. In the end, we come together and decide how we are going to spend our money. Staying out of debt allows us to stay in control of our relationship with money and the future of our family.
We also have an “open checkbook policy”, which gives my wife complete freedom to purchase anything she wants at any time. She is free from all budget constraints, knowing that every purchase will be accounted and adjusted for. That way she does not feel controlled by the budget; even though she never actually makes a large purchase without discussing it with me. I think many people struggle with budgeting because they are afraid their spouse will use the budget to control them. Our ‘open checkbook’ policy allows us to get over that, and lets my wife feel comfortable discussing all money matter with me knowing that I am not trying to control her - but only trying to better the future of our entire family. In this way, she is very appreciative of my initiative to lead our family into the future.
Reference Article: Getting The Entire Family Involved With Managing Our Finances
Budgeting Brings Increase
Budgeting brings our family together and increases the intimacy between me and my wife. We budget to be free from debt and ready for new investment opportunities. We plan together, spend together and invest together. Budgeting has helped my family tremendously.
Reference Article: Budgeting Brings Increase
Once a Week
The stay on top of our money, I spend about 15 minutes per week, totaling the money we spent and comparing it to the budget. I have found that balancing our money weekly is the best timing. If I look at our money daily it’s just not a long enough period to understand a trend, and if I look at our money monthly it gets too complicated and it’s hard to remember everything that happen. The best time of the week for me has been Sunday night, before the beginning of the next week.
Budgeting can be a challenge, but if you take the time and setup a system that works for your family, it can also be a huge benefit.
Here is an easy tool for creating a budget, Free Budgeting Tool.