How to Make a Budget
April 30, 2018
Making a budget for the first time can be a little intimidating. I’ve been keeping a budget for about five years now. I’d love to say that I did it right the first time and never had a problem sticking to my budget but, that would be a lie. The fact of the matter is that it took time for me to perfect my budget. Every day I have to work on sticking to it. Times have changed and so has my life and my budgeting needs. I was married with two young children five years ago, and now I’m a single mom with teenagers. My budget is a living organism, constantly changing as my families’ needs change.
The most important part of creating a budget is getting your priorities straight. If you’re looking for information about a budget then you’ve probably run into a few problems in the money management department. That’s OK, it happens to most people. Try to start with the things your household absolutely must allow for: groceries, electricity, water, rent, gas and phone. Hopefully after budgeting for these necessities you can then allow for other necessary expenses. Please, don’t forget about the expenses that only show up once a year or every few months: oil changes, car/life insurance, savings, tithe, car tag and clothing, hair cuts, misc.
You may not consider savings a necessity. But, if you consider all of the things that can and do go wrong, you will see that having some savings is very important. You have to save up for the occasional car break down and medical emergency. These things won’t skip your house just because you have a positive attitude. Savings should be first on your list if possible and try to find some money to give to your local church or charity. Giving back not only makes you feel good, but it’s part of making your budget work. The more you give, the more you get back over time. If you can afford to give, I highly recommend it.
After you’ve budgeted the basic household expenses, it’s time to add your debt and extras. I have a budget for eating out, entertainment, school supplies, cosmetics, spending money and of course gifts. Now that I have teenagers, I’ve learned that I need to budget for things like prom dresses, school clothes, eye glasses, school sports and braces. Sometimes, I have to cut back in some areas to create a budget for another. Recently, for example, I lowered my grocery and gas budget so that I could start a small prom dress budget. Last year I found out how expensive those dresses are. I decided that it would be a lot easier to set aside $10 a month than to dish out $100 and rob my budget to pay for a dress. I’m not as worried about prom expenses this year and it gives me a feeling of relief to know that I prepared for it ahead of time.
Over the past three years I’ve fallen in love with spread sheets, at least as it pertains to budgets. I use an excel spread sheet so I can have a worksheet for each type of budget. I highly recommend having a monthly budget. This serves as a quick reference sheet. I start with my net salary and subtract each bill and try to make sure I’ve spent every penny. It’s not that I want to live week to week, I want to make sure I know where my money is going. Sure, sometimes it’s hard to stick to the budget, but it’s worth it when I need something and already have the money set aside.
Unlike some people, I like to take this budget thing a step further. I also have a weekly budget. Since my paycheck varies from week to week, I have a spreadsheet that lists my net income for each week and subtracts the bills for that week. For example, this week I may make $600 net. I’ll put this at the top of the column and subtract the cost of groceries, gas, rent, utilities, gifts, tithe, cable and spending money. I even have a separate spreadsheet for my debts. I don’t keep them separate from my weekly budget but I’m a little obsessed. I enjoy counting down the days until my debts are paid off. And when I say obsessed, I check my weekly budget several times a day and my debts at least 3 times a week. It doesn’t change that quickly but it helps me keep it at the front of my mind.
Years ago, I would forget to pay my bills on time or write checks when I knew the money wouldn’t be there for a couple of days. I was constantly floating checks and counting on the slow banking system to work in my favor. It didn’t always work, of course. I also had a debit problem. No, that’s not a misspelling. I did mean that I had a debit problem. If you have this problem then you know exactly what I’m talking about. Sometimes, I would forget to record my debits and over spend my budget. I just can’t afford to make those types of mistakes anymore. I never really could afford to make those mistakes.
I’ve read several books on the subject and then took what I learned and adjusted the information to fit my lifestyle and personality. I highly recommend reading Dave Ramsey’s book The Total Money Makeover and any of Larry Burkett’s budgeting books. Also, if you need more help than this, I highly recommend taking a budgeting class. We have several offered at our local churches. You may have some in your area. Crown Financial Ministries offers a class in money management as does, Dave Ramsey.
Helping a Family Member with Finances: 6 Rules to Follow
March 5, 2018
Helping a family member with finances can lead to disaster. Why? Most people don’t know how to approach a family about money for fear of losing this person’s love. It’s a situation I’ve experienced personally. After giving a relative several loans and never getting paid back, I reacted with anger. Although this person should have paid me back, my approach was completely wrong. It took years for our relationship to heal. The event taught me a good lesson and a few rules to follow anytime you want to help a relative with finances.
Rule #1 – Only loan money to a family member that you an afford to lose.
Helping a family member with his finances often starts with a loan. It’s a loan that bails him out of a financial mess. However, people who are struggling with money often can’t pay it back. So, it’s best only to loan money to a family member if you can afford to lose it. It will be less risky and help you avoid a lot of hard feelings.
Rule #2 – Talk about money to a family member in a non-threatening environment.
If you want to help a family member with his finances, do it in a non-threading environment. So Thanksgiving dinner is not a great time to bring up the fact that your kid brother doesn’t know how to budget. Instead, take him out to dinner (one-on-one) and explain how much you love him and are concerned about his future. Then, talk about the subject of money – preferably after you’ve eaten your meals.
Rule #3 – Ask your family member if it is all right to help him with his finances.
No matter how strongly you feel about helping your family member with his finances, only do it if he gives you the green light. Otherwise, he will feel bullied or belittled, especially if you are an older sibling. So offer to help him and respect whatever answer he gives you.
Rule #4 – Teach your family member about money by admitting your own mistakes.
Teach your family member how to manage money. Your lesson should start with a few examples of how you blew it financially. Use these situations to help your family member feel more comfortable and less judged about his current financial situation. Then, get down to basics. Talk about budgeting, investing and living within one’s means.
Rule #5 – Walk Your family member through the process of resolving his financial crisis.
One of the most supportive things you can do with a family member struggling with anything is to walk with him through it. This means that you will have to actively assist your family member in getting out of his current financial situation. You may have to call bill collectors, go through old bills, write out a budget or boost him up while he does these things. Just be sure to only do the things that your family member is comfortable with you doing and to ask in advance.
Rule #6 – Don’t throw your assistance back in your family member’s face after it’s over.
The quickest way to ruin a family relationship is to throw everything you’ve ever done for a sibling, child, mother or father back in his or her face. Besides making you sound like a jerk, it makes the person feel small. Remember, even if you gave good advice, the family member took it and did the work. So give them the respect of “silence.” Let your family member brag about how you helped him out of a financial jam.
Follow these six rules and you’ll be able to help a family member with finances without ruining your relationship. Your relative will get much needed help and you will get a chance to be a good relative. It is a win-win situation.
Adolescent Banking Tips
February 5, 2018
The banking practices of a six-year old are quite simple. Finding quarters on the sidewalk equals hoarding quarters in a pillow case, an old tuna jar, or the bathroom drawer. The banking practices of a fifty-year old, though considerably more complex, are almost as well defined. For the astute researcher, there is a myriad of information about IRAs, 401(k)s, retirement plans, social security planning, home equity, low-risk investment, etc. However, adolescents traverse a tricky field; they don’t have $10,000 to invest in blue-chip equities, but they have considerably more than eleven nickels they pocketed from their older sister. With enough information, however, an adolescent is more than capable of creating an action-oriented financial plan that does more than keep the nickels and dimes safe – it becomes an introduction to the more complex but ultimately more rewarding world of adult finance.
Don’t Be a Lazy Bum.
A balance should be struck between sweat-shop labor and habitual laziness, where inactivity is tempered only by slurping soda or switching channels. Adolescence is simply the best opportunity for maturing children to learn responsibility, finances and time management. After adolescence, a job becomes a necessarily lifeline. It’s no longer of question of funds for parties, movies, or treats – it’s a choice between housing and homelessness. This pressure is not present for an adolescent. Life lessons can be learned without the drains of financial needs. Most importantly, part-time employment teaches responsibility and personal management, as well as imparting self-esteem. Young adults learn to contribute to society, while making personal gains.
Which jobs are best for teenagers? Be creative – sadly, many teenage jobs require no intellect, no enthusiasm and no talent. However, there are several welcome opportunities encouraging independence and entrepreneurship. For girls, try baby-sitting. For guys, try lawn-care and home maintenance. Fan the creative flame – if the teenager is an artist or a performer, transform that artistic energy into a cash-making enterprise. Don’t be a lazy bum – engage, learn, and grow.
My Sock Is Too Small
It’s a happy day when the hard-gained sums of cash and dollar bills overflow the sock bank. This is the great transition from childhood to adolescence; now, what to do with all that money? Banks are the saviors of overfilled socks, coin jars, and other assorted storage containers. This is for two reasons: first, they provide monetary security. With very exceptions, banks are the safest places to keep your money. With the ever-flowing international river of credit, assorted contracts, and incredible quantity of money floating around, the days of banks suddenly “going under” are long-gone. With that said, some banks are better than others. Choose institutions that have been around for a while and also review customer satisfaction. In addition, banks will generally specialize in certain areas – cash loans, equities, real estate investment, etc. Find a bank that specializes in a reliable field. Most importantly, choose one with lots of money. Then select the best type of account. For individuals with less than ten thousand dollars, the practical options are limited. First, there is a basic savings account. This, in terms of investment, is nearly worthless. Rarely even matching inflation rates, savings accounts will rarely breach 2% annual interest. They are a proper choice for a mere introduction to the banking system, but look for ways to improve your money management. Second, check out CDs (Certificate of Deposits). Although not the choice if you plan on withdrawing funds often (a pre-mature withdrawal typically entails loss of all interest gained over a specified period), they can be a great way to turn compound interest to your advantage. For many teens, who want easy access to cash but also want to be able to make money through interest, consider a dynamic duo: a savings account (or a checking account) and a three to six month CD. Third, for more aspiring (a.k.a. richer) adolescents, consider instituting an IRA (Individual Retirement Account) or even an investment portfolio – although, if you’re under eighteen, parents will set to set up an overseer account. There are several programs set designed to specifically address equity or bond investment for teens with low amounts of cash but high amounts of curiosity.
Save Smart, Live Happy
Living frugally does not mean going with wants or desires. In fact, in the long run, saving smart allows you to purchase what you really want. A Snickers bar may look quite delectable at ten o’clock at night, but a bass guitar looks fantastic for years. Financial management doesn’t simply mean how to earn money; it also entails how to save and spend money. For many teens, especially pre-teens and young adolescents, these lessons may be new and unfamiliar. Parental supervision in these instances is not inappropriate interference but necessary direction.
So what are the key methods of saving smart and living happy? Take time and consider every purchase. A good rule of thumb is don’t buy what you hadn’t planned to buy. When evaluating a purchase, consider its long-term importance and enjoyment. A $10 football can give much more enjoyment than $10 worth of donuts and bagels. Prioritize: what is needed, what is wanted, and what is really wanted? And don’t be stingy – treat yourself occasionally to an exciting movie, tasty pizza, or eye-turning pair of jeans. The secret to financial happiness is simple: save lots, prioritize, spend little.
Adolescent banking and finance doesn’t have to be confusing. When pursued in a proper manner, it is well worth the time and effort. The teenage years are a phenomenal opportunity to develop character, financial management, and a sizeable personal piggy bank. It is time to put those quarters – and the sock – to some good use.