Household Budgets...
Are They Really Necessary?
In my opinion, household budgets are an absolute necessity to getting ahead financially, no matter how young or old you are.
You know the old saying, "By failing to plan, you are planning to fail!"
The same holds true financially...if you fail to plan financially, or in other words, create and follow a household budget, you are, in all reality, setting yourself up for financial disaster!
This is true until you make enough money that you no longer need a budget, but for most average people, household budgets are avoided like the plague.
I agree...living by a budget is no fun...so do something about it and go out and make more money...but until then, you'd better get your budget prepared, and live by it.
Looked at in another way, nearly all successful companies prepare monthly and annual budgets and forecasts. This is done in an attempt to make the company as profitable as possible, as well as plan for cash needs and surpluses.
You should look at your own personal cash flow as a "mini business". You should plan monthly and annually for cash flow shortages, as well as cash flow surpluses within your personal financial situation.
As always, there WILL be surprises, but if you plan and budget appropriately, the surprises should have less of an impact on your overall financial condition.
If you don't currently have monthly or annual budgets, realize that you are not alone. Although I consider it a necessity, most people don't have them.
Consequently, those who don't have household budgets are not in complete control of their financial lives.
Well, that's about to change, and you no longer will have any excuses. Below, I have provided you with several different options for creating a budget, so you choose the method which works best for you.
Please keep in mind...
It does you no good to create a budget for yourself or your family, if you don't plan to stick to it.
A quick story...I had a tenant in one of my investment properties that had no idea how to create a budget, but worse yet, she had no idea how to live by a budget.
And her husband was absolutely no help either, as he didn't have any idea what was going on with their household finances, and didn't want to know...it's no wonder they were evicted, even though they made plenty of money to pay their bills.
I, as their "landlord", went out of my way to try to help them, as I spent my own time and effort setting up a budget for them using several different methods. None of them worked!
The reason...they themselves didn't make the decision in their lives to change their spending habits and financial behavior.
And until they make that decision, they will continue to struggle for the rest of their lives...no matter where they live or what job they have. I know that sounds cold, but it's the truth...and the truth hurts!
No matter which type of budget you prefer to use, it's essential that you have discipline with your spending! Again, you HAVE to start doing things differently than you've done in the past, or you'll continue to get the same results you've always gotten! If you have any hope of taking control of your financial life and getting ahead, you must develop some spending discipline and control!
In my mind, it's important that you not only prepare a budget to live by monthly, but by also preparing one annually, you can try to anticipate some of the cash flow deficits and surpluses that will arise in your life.
So without further adieu, here are several methods you can use to create a household budget of your own.
1) A Computer Spreadsheet Budget
2) A Handwritten Budget (aka Pen & Pencil Budget)
3) An Envelope Budget
4) A Computer Software Budget
Please, please, please...get your spending under control.
If your credit cards are currently out of control, quit using them!
There are ways that credit cards can be very beneficial for you when used properly, but if they are out of control...stop the madness...quit using them and compounding your problems.
You're digging yourself a hole that you'll never be able to climb out of!
The same holds true for your ATM/Debit card. I know so many people that get cash out of their bank account with their ATM card, and before you know it, the money's gone, and they have no idea where they spent it.
Or worse yet, they put a purchase on their debit card, forget that they spent the money, and then overdraft their bank account, causing additional problems and bank fees.
I'll address some of these concerns in my pages on bank accounts, coming in the near future.
But for now, get to working on those household budgets!
To Your Success...
David Jesse, Your Fellow Average Joe