(If you didn’t sing the title, you can leave now.) ;P
I thought I wrote a post about this at some point, but it turns out I have not. I have touched on a few things that I’ll mention here as well in other posts, such as fun money, emergency funds, and annual/infrequent expenses. However, writing a budget (and sticking to it) is so much more than that.
I’ve given a lot of presentations and taught a lot of classes about budgeting before, and I’ve helped probably 100 servicemembers and their families write budgets. I have learned a few big things from these experiences.
- Budget is not a dirty word. I say this because people look at budgets the way they look at diets. Restrictive. Impossible. Something to do for a little bit before we go back to irresponsibly binging, whether with food or with money. (Or in my case, spending money on food.)
- Your budget needs to have 3 qualities.
a. Be realistic. If you go out to eat 8 times a month, do you really think $50 the first month you’re budgeting is going to cut it? You can aim to reduce your restaurant spending over the long haul, but you don’t want to feel so restricted that you give up and go out, ordering appetizers, desserts, and drinks.
b. Be proactive. As mentioned before in the annual/infrequent expenses post, things that can be predicted should not be a surprise. Don’t let annual expenses derail you: your car registration expires the same month every time; Christmas is the same day every year.
c. Be honest. If you know you’re going to do something whether or not you budget for it, budget for it anyways. As an example, I’ve met hundreds of sailors that want to go home for the holidays or leave and don’t save a penny for it. If you suggested that they didn’t go because they didn’t budget for it, they would act as if you slapped them across the face. They don’t care that they didn’t budget; in their mind, they’ve already decided that they’re going, even if it goes on a credit card. Obviously if you’re reading this post in November and know you want to go home for Christmas, there is not much you can do about it now, but if you’re reading it today (July 10th), you have plenty of time to start budgeting for these expenses, and don’t steal from the savings account the funds are in, because you know you’re going to need it. - Credit cards are not the devil. Even though sometimes it can be easy to spend more than you have, you can definitely use credit cards wisely and even earn rewards while doing it! Pay it off every month, reap rewards, build excellent credit to save yourself on your next car loan, mortgage, whatnot. Win win win.
Before we get started with how we’re actually going to write your budget and implement it, look through your recent statements to come up with an idea of reasonable amounts to allocate toward restaurants, gas, groceries, and fun money. Write a list of your annual and infrequent expenses. Write a list of all of your debts and their interest rates as well, because I’m sure getting out of debt is going to be a budget goal. We’ll set up a good plan to reach your goals and stick to your budget in part two!
