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Purpose of a Budget…and why you need one!

By: Sweet Frugal Lifecomment

All of the reasons you should make a budget.

If you’ve been following here for a while you know that I preach budgeting to everyone and anyone who will listen!  I truly believe that every single person should have a budget, regardless of how much or how little money you earn.  Not sure what the purpose of a budget is???  Well I’ll tell you today, so keep reading!

reasons to budget - why you should make a budget

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The Purpose Of Budgeting

I’ll be honest with you….years ago I did not believe in budgeting.  I felt like it was something that was only for families that were pinching pennies….and my family seemed to be getting by just fine without a budget.

But then my entire thought process changed after I randomly picked up Dave Ramsey’s Total Money Makeover in the library one day.  This book opened my eyes to how our finances could be, if we only adjusted some of our habits….so we started budgeting.

It honestly took about 5 years of trying, failing, giving up, trying again, etc. until we got to a comfortable/confident place when it comes to the budget.

One of the things I learned through this experience is just how much a budget can change your finances.  Before we started budgeting, I really thought that we were fine the way we were spending, but once I had that budget to hold me accountable we were able to find so much extra money….and instead of spending that money on stuff (like the pre budget days) we were able to spend it on things that were much more important to us, like travel, retirement, saving for a car, etc.

If I can change my stubborn ways, anyone can!

1.  A Budget Prevents Overspending

One of the most important purposes of a budget is that it prevents overspending.

If you take the time to make a budget and give every dollar a job, a category, then you will be much less likely to impulse shop and buy things just because they caught your eye (may or may not be talking about myself here….).

Try to get into the habit of checking in with your budget daily.  This daily check in is so important to make sure you are staying on track, and to remind yourself of your money goals.

The days I don’t check in with my budget are the days I tend to impulse buy, because I convince myself we have enough money in the budget.  However, if I take the time to look at the budget then I am more aware of my spending and am able to control my overspending impulses.

2.  Budgeting Reduces Stress

It’s true!  A budget can/will ease your financial worries resulting in a less stressful life.  If you are budgeting with sinking funds (which I recommend!) then you will always be prepared for what’s to come, resulting in less stress.

For example, every year I make a sinking fund for Christmas expenses.  I save into that sinking fund with each paycheck, then when the holidays come along I can buy Christmas presents, Christmas decor, and any other items I need/want for the holidays using the money I have already saved, which completely eliminates financial stress during the Christmas season!

3.  A Budget Helps You Reach Your Goals

Another important purpose of a budget is that it will help you reach your money and savings goals. 

Want to save for a vacation, but money keeps flying out the window???  Make a budget!  Calculate how much you are spending in each area, look at the ways you can cut those costs, and then budget a sinking fund for vacation!  Yay!

Yes, making a budget and cutting expenses will require some sacrifice on your part, but with consistency you will be able to reach those important goals. Budgeting has a way of helping you focus on your priorities.

4.  Budgeting Helps You Spend Money Guilt Free

Most of us like to spend money….but we don’t like the guilt that often comes after spending money.  And this is exactly why I love a budget!  A budget gives you permission to spend money, guilt free!

Don’t believe me yet?  Check out these two scenarios:

Scenario A:

Allie wants new living room furniture.  She has her eye on a couch at a local furniture store and notices it goes on sale one weekend.  Allie excitedly runs to the furniture store to buy the couch.

She doesn’t have enough money to pay for the couch in full, but the store offers her to make monthly payments for a year to be able to buy it.  Allie buys the couch and has it delivered.

The monthly couch bill begins arriving and Allie starts to panic.  She didn’t realize how tight the monthly payments would make her finances.  The stress of paying this bill, along with all of her other expenses begins to set in and she feels guilty for making this purchase in the first place.  She realizes she acted on impulse, and doesn’t quit have the funds available.

Scenario B:

Brooke also wants new living room furniture.  She looks at a few different pieces of furniture at multiple stores and writes down their averages prices.  Brooke then makes a sinking fund category in her budget to help her slowly save the money she needs to buy her new couch.

Over the course of 6 months Brooke deposits money into that sinking fund, using her budget.  After 6 months her sinking fund is fully funded and she excitedly goes into the furniture store to purchase her new couch.  She is so excited to purchase the couch with cash, and pay in full.

The couch is delivered and Brooke is able to enjoy it for many years.  Brooke has zero guilt about this purchase because she knew she already had the money saved in her budget, and there are no surprise bills.

Do you notice in these two scenarios how they both have the same goal, and they both were able to achieve that goal, but one came with guilt and stress, and the other only came with joy??  A budget is so freeing!

5.  A Budget Helps You Get Out Of Debt And Stay Out Of Debt

One of my favorite things about my little ol blog is getting to cheer you on as you reach your debt freedom goals.  There is nothing I love more than receiving a message from a reader telling me how proud they are of themselves for being able to pay off their debt thanks to making a budget.

Budgeting helps you plan your finances in a way that makes debt pay off a priority.  Being mindful of your spending, and prioritizing how each paycheck is spent is one of the most important steps to paying off debt. 

If you are wanting to pay off debt, I recommend making a budget and also reading my article How To Pay Off Debt With The Debt Snowball.

6.  Budgeting Helps You Understand Your Spending Habits

One of the most important parts of frugal living is being able to understand your spending habits, and a budget will show you exactly how you spend your money; including the good and the bad.  

When you sit down to budget each week you will be forced to see the categories you consistently overspend in.  Having this knowledge will give you the tools and motivation you need to reduce your spending in these areas.

When I first started budgeting I had convinced myself I was spending a certain amount of money on groceries each week.  But, after making a budget, I realized the cold hard truth.  I was spending so much more than I had realized.  Once I knew that this was a category I was overspending in, I was able to teach myself some new skills to reduce our grocery spending.

7.  A Budget Gives You Control Over Your Money

Do you ever get to the end of the month (or week) and wonder, “What happened to my huge paycheck I just got???  Where did all of my hard earned money go so quickly”?

I’ve had that thought, and it’s not a great feeling!

Do you want to know what my solution was?  Yep!  You guessed it, I needed to make a budget.

A big purpose of a budget is to help you have more control over your money, so that you don’t have to wonder where it all went at the end of each month.  You’ll know exactly where every dollar was spent, because you made a plan for those dollars and you stuck to the plan.

Want To Start Budgeting?

Have I convinced you yet that a budget is life changing (cause it totally is!).  

If you are ready to make the jump into budgeting, but aren’t sure how to start…..don’t worry!  I have you covered!  First, I recommend you check out my full budgeting tutorial here:  Zero Based Budget.

And then download my free budgeting cheat sheets.  They will walk you through everything you need to know to be able to make your first budget.  You got this!!!

 

 

Related Articles:

7 Simple Ways To Get Your Budget Back On Track (for good this time!)

How To Find Extra Money In Your Budget

Tips For Budgeting As A Couple

 

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purposes of a budget - why you need a budget

 

Now you know the purpose of a budget!

Tips For Budgeting As A Couple

By: Sweet Frugal Life2 Comments

How to get your spouse to budget when they don’t want to.

Do you struggle budgeting as a couple?  I can so relate!  I have been there!

My husband and I are constantly working on getting on the same page with a budget.

It all started about 10 years ago when I read a book that changed my life, Dave Ramsey’s Total Money Makeover book and I knew it was time to start looking at our finances differently.  I decided right then and there that my husband and I would make a budget, and stick to it faithfully.

Later that night I happily told my husband the good news, “We are going to start budgeting and will be able to save so much money!” I announced.

I looked at his face, fully expecting to see the same enthusiasm that I felt……but instead of joy, I saw annoyance.

“Why do we need to budget?  We spend less than I make every month” he asked me.

I spent a few minutes explaining to him that a budget could help us save for our future, eliminate some unnecessary spending, and set us up for financial success, fully expecting him to be just as excited about it as I was.

But, he just didn’t have the same vision as I had.  Which, in hindsight is understandable.  I had accepted him to jump on board with my new found financial knowledge, simply because I was telling him that it was a good idea.  I wanted him to feel like I felt, without ever giving him the opportunity to form his own views.

Here’s the thing about relationships:  you can not force your spouse to have your same views.  That’s not how a marriage works.  A marriage is a partnership between two separate people.  Each of the partners will, should, and have their own opinions, thoughts, goals, and ideas.  I’m going to say it again, you can not force your spouse to be something they aren’t.

It took me a few months of talking (and disagreeing) to my husband about budgeting before I finally asked, “Can we just try it?  Let’s just try it for one month and see how it goes.  I think it could really help us!”

Fortunately, he agreed.  We sat together one evening and set up a budget.  There were frustrations, we have had plenty of mishaps, and we have had to start and restart time and time again.  But.  A decade later and we still budget.  In fact, my husband is the one that 99% of the time reminds me it’s time to discuss the budget.

So what changed?  I believe there were two main points that changed my husbands mind about the whole budget thing.

  1.  He saw that a budget did in fact make a difference.  My husband needed to decide for himself if he felt that a budget was worthwhile.  Once he saw how much more money we did actually save on a budget, he embraced the vision.
  2. It became a habit.  He really didn’t like the idea of having “one more thing” on his to do list.  But, after a few months it has become a habit and doesn’t feel like an extra chore, it’s just what we do.

Now, I understand that not all situations go like mine.  Some spouses are more willing and others are much less willing to budget together.  Here are a few tips to help you when your spouse just doesn’t want to budget.

How you can get your spouse to budget #budgetingcouples #budgetasacouple #frugalcouple #savingmoney #budgetinghelp

Tips For Budgeting As A Couple

1.  Communicate

Communication is so important in a marriage, and finances is no different.  Communicate with your spouse why you want to budget and your goals and concerns for your future.  Explain to him why this is important to you, and why it is important to you to do together.

In return, listen.  Listen to your spouses concerns.  Ask him why he doesn’t want to budget, ask him how you can help make it easier for them, and genuinely listen and care about his responses.

2.  Make it Fun

Try to make budgeting fun (yes!  budgeting can be fun…..ish!).  Instead of saying something like, “Let’s have a budget meeting.” (I mean, that prob sounds fairly boring to anyone, right!?), invite your spouse to something fun, plus a budget meeting!

You could go on a walk, have a picnic, or bring their favorite foods to enjoy while discussing the budget.  Make the budget meetings a little less boring and try to make it a fun experience for everyone involved.

2.  No blaming

When it comes to the budget you need to work as a team.  Avoid putting blame on your spouse.  Instead of, “You spent way to much this month!” say phrases like, “We spent to much this month.”  Yes!  Even if it truly might be your spouse overspending, work as a team and never ever blame.  The only thing blaming will bring is contention, and contention won’t make a budget.

3.  Be Willing to Compromise

Compromise is a must when budgeting as a couple.  Maybe you are super frugal and your spouse isn’t, this is totally normal!

Find a way to meet in the middle.  Perhaps your spouse wants to get a hair cut and color every month, but you feel that makes the budget to tight.  Ask if they would be willing to get a cut and color every 6-8 weeks instead.  Give your spouse freedom in their budget, while also making sure the budget is kept.

4.  Personal Spending Money

Include personal spending money for both you and your spouse.  This spending money gives both of you the freedom to spend how you want, when you want, with completely no guilt or judgement attached to it.

The amount received for personal spending will vary based on your income and expenses.  However, you and your spouse should both receive the exact same amount.

I love having this guilt free spending money!  

5.  Be the Example

Maybe your spouse just doesn’t get it, and that’s OK!  The whole idea of budgeting might be a little daunting or strange to them, which is exactly how my husband was.  Be an example of living by a successful budget so they can learn from you.

Excitedly show your partner how much money you saved by doing “xyz” that month.  Your positive attitude just might rub off and they will want to join in on your success.

6.  Celebrate the Wins

Positive reinforcement goes a long ways in marriage, and life in general.  When your spouse sticks to the budget, celebrate.  Buy them their favorite treat, genuinely praise them, and let them know how proud you are of them.

Everyone likes to feel appreciated and having mini celebrations can help budgeting feel much more bearable.

7.  Make a Plan Together

Together is the key word in this.  Sit down and discuss your goals for the future and present.  Plan how you can reach these goals and make a plan going forward.  Allow your spouse to give their opinions about the way the plan and budget will look.  It might not be exactly how you think it should be, but remember compromise matters.

When Nothing Works

If you have tried everything you can to get your spouse to budget and it’s just not working, you are not alone.  Financial disagreements are common among all couples.

Focus on the things that you can control within your budget.  Spend wisely.  Budget as best as you can by yourself and do what you can to keep the finances in order.  Alone is never fun, but it can be done.  Lean on support groups through facebook or family and friends to help give you the support you need.

Related Articles:

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I hope this gave you some good tips about budgeting as a couple.

How To Budget With An Inconsistent Income

By: Sweet Frugal Lifecomment

How to budget when you have an irregular income.

Have you been trying to budget with an inconsistent income and keep falling short?  Do not worry!  You are not alone!  This is a very common problem that people with irregular incomes experience.  When incomes changes from month to month it can be very hard to know how to budget.  I mean, if you don’t know how much money you’ll be earning each month, how do you decide how much to spend?  I get it, and I am here to help!  There are a few tricks you can use to make budgeting with an irregular income not only easier, but possible.  Today I’m excited to share my tips to help you learn how to budget with an inconsistent income.

First Things First

Before we get ahead of ourselves, let’s first do a quick run through and how to make a budget.  When it comes to budgeting, I recommend making a zero based budget. 

Zero based budgeting is really just a fancy term that means that when making your budget your expenses will equal your income.  Every dollar you will be earning will have a job, a category it will be put in.  This doesn’t mean you will be spending every dollar, just that you will find a category for every dollar in your budget.

This form of budgeting has helped my husband and I find so much financial success and limit our impulse spending.  If it’s not in the budget, we can’t buy it!

If you are new to zero based budgeting, or budgeting in general, make sure to grab my free Budget Cheat Sheets below to help you get started!

How To Budget With An Inconsistent Income

There are a few different tricks you can do when learning how to budget with an inconsistent income.  I suggest trying a few of these methods out until you find what works best for you and your income.

1.  Make your budget based on your lowest expected income.

My first tip to budgeting with a variable income is to make your budget based off of your lowest expected income for that month.  It’s always better to have to much money, instead of not enough, right?  Right.

When you budget off of your lowest expected income you can be confident in knowing you have budgeted enough money for your monthly expenses.  And, if your income ends up being higher, well, than that’s just icing on the cake!

To find your lowest expected income you will first need to review your income statements from the previous year.  Compare each month until you find the lowest amount you earned last year.

Use that amount of money as your base income for your budget.  

If throughout the month you earn more money than you your lowest expected, you can use that money to:

2.  Budget off of the previous months income.

Instead of living off of the amount of money you will be earning this month, live off of your income from the previous month.

For Example:

Let’s say that you earn $5,000 in January, $3,200 in February, and $5,500 in March.

In February you will not budget or spend any of the $3,200 you will be earning.  Instead, you will be budgeting and spending the $5,000 you earned in January, and set aside your February earnings.  Then in March you will budget the $3,200 from February and save your March earnings until the next month.

Make sense?

Budgeting off of the previous months income can take some practice and self control, but it is a great way to ensure you have the money before you budget for the month.

If you find yourself constantly tempted to spend your monthly income, instead of the previous months, you might want to set up a separate bank account to store that money in until it’s time to use it.

3.  Create a Hill and Valley Fund.

A Hill and Valley Fund is one of the most effective ways to budget with an inconsistent income.

The Hill and Valley Fund is based off of the “Hills” and “Valleys” many people with irregular incomes experience.  Some months your income will be big, like a Hill; and other months it might be a lot smaller, like a Valley.

Creating a Hill and Valley Fund is a way for you to help even out these variable income months.  A Hill and Valley Fund is similar to a sinking fund.

*A sinking fund is a fund you save into regularly, but only use when needed.

The best way to grow this fund is to save some of your excess money during a “Hill” month into this fund, which isn’t always easy, but so important.   Then, on the months when your income is low, a “Valley” month, you can use some of the money you have saved.

You can track your Hill and Valley Fund, similar to a sinking fund, within your budgeting programs.  Or, set up a separate banking account to keep this savings in.  Whichever works best for you!

Stay Consistent

It can be stressful when trying to learn how to budget with an inconsistent income.  One of the most important things to remember is to not let that stress deter you from budgeting.  Keep working your budget, trying different methods, and using your Hill and Valley fund and you will see success.

Try these three steps when making your next budget, and remember to stay consistent.  Consistency is key to living within a budget, no matter how much money you earn.  You can do it!  I believe in you!

 

Related Articles:

Extreme Ways to Cut Your Budget

How to Get Your Spouse to Budget

The Best Frugal Living Tips You Need to Know

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I hope this article helps you know how to budget with an inconsistent income!

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