3 Quick Budgets Do’s and Don’ts
Along my current theme of budgeting, I wanted to start breaking down the myths that go along with the idea of a budget, and let everyone see that budgets can be fun and add value to your life, not restrictive and punitive. The word "budget" has such a harsh and negative connotation, and for me, honestly, a budget has been the most freeing exercise I have ever done. Here are some ways to make your budget work for you instead of working for your budget.
1. DO: Be a realist. Do you have fun things you like to do that you feel are too frivilous for a budget? Don't completely ignore them and try to budget them out of your life. Set a certain amount each month (it can be tiny or larger depending on what you have available) for having the occasional cup of coffee or meal out or trip to the movies or whatever it is that adds a little value to your life. Plan for it and you won't break the bank - and planning for it keeps it in check.
2. DON'T: Leave some money unbudgeted. Make a plan for all of your money each month. Don't just leave some out so you don;t have to account for it to give yourself a budgeting "out". Plan all of your money, even if some of it is in vague categories, so you can see how well your budget fits with your financial goals.
3. DO: Have a budget that aligns with the goals you want to accomplish. The purpose of budgeting is to make your money work for you in the way you want it to. Don't budget 0% for savings if your goal is to retire. Look at what percentages of your money is budgeted for different categories. Is budgeting 20% of your money for car-related expenses in line with your goals? if not, revisit how much you drive, the car you have, or other ways to knock that expense down.
A good budget reflects your personal ideals and is a unique snapshot of who you are and what you want to accomplish. Make sure your household budget fits the vision you have for your life and what you want to accomplish.
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2 Responses to “3 Quick Budgets Do’s and Don’ts”
November 7th, 2008 at 1:17 pm
I’d add one more:
DO: Leave room for the unexpected! Even if you’re committed to sticking to a budget, the Universe can throw you a curve ball. Don’t get so caught up in adhering strictly to a budget that you feel like you have to scrap the whole project as a failure if something unexpected puts a temporary wrench in your plans.
(I’m still learning this one, as I realize I’m going to have to buy lunch for a 2nd, unbudgeted day this week because we were informed that our cafe area (where we can store and heat food) was going to be off-limits today. Whoops. But there’s nothing I can do about it!)
November 24th, 2008 at 6:49 pm
I think point number 1 is very important. It is important to have some ‘mad money’ set aside each week, fortnight or month. This ‘mad money’ should be a small amount, but an amount that accumulates month by month if it isn’t spent. This encourages you to save for larger and more worthwhile ‘mad’ items, rather than spending it on smaller items of little value i.e. buy coffees versus a MP3 player.
I personally dislike spending money on consumable items, as I have nothing of value left after the item is consumed.
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