5 Tips On Starting A Budget

Budgeting has a reputation for being restrictive, but there is freedom found in giving yourself limits. I didn’t realize how significant a budget would play in simplifying my life. Before we were living on a budget we would spend money without thinking about it. We had a general idea of what we could spend and basically spent up to that point each month. Because we weren’t on a budget we never had anything leftover for savings by the month’s end. This became a vicious cycle and would cause me to feel frustrated at our lack of planning and saving. I felt guilty every time I spent money on anything and was creating an unhealthy relationship with money.

Ridding myself of guilt and pressure was a motivating factor when I began to simplify and I knew incorporating a budget was going to be necessary. I wanted to be able to spend money on the things we needed and also on the activities we enjoyed without all of the guilt surrounding those purchases. I hit quite a few bumps when I started budgeting for our family; I was too restrictive and didn’t have the necessary conversations with my husband to get us on the same page. Through my own trial and error I have put together 5 tips for when you are ready to begin your own budget.

Track Your Spending

Tracking your spending is the most important piece of a budget. I recommend before building your budget that you take the next 30 days to track your spending. It is important to track everything, even the 50 cents you spend at a vending machine. Every penny spent should be accounted for so you have an accurate picture of where your money is going. Tracking your spending also creates some friction, whether you download an app or keep a paper list, having to track what you spend will make your spending more mindful.

In addition to tracking, take some time to go over your bank and credit card statements to get an idea of what you are spending each month. By taking the time to look at your past spending you’ll be able to see where you can make immediate cutbacks. If you are budgeting with a partner make sure you are both keeping receipts and create a system to share those receipts. It can be as simple as putting them in a jar at the end of each day. The beginning stages of tracking will feel daunting, but like any new habit stick with it and it’ll eventually become second nature.

Include Your Partner

A major thing couples fight about is money. Understanding each other’s history with money and having open and honest conversations can alleviate a lot of the stress of a new budget. If you share any part of your finances with another person, getting them on board with budgeting could be challenging. Many people have negative associations with a budget. It seems restrictive and can make you feel as if you’ll never see the inside of a restaurant again.

From my own experience it took me tightening the reins with my own spending first before my husband could see the benefits of this new budget. It is important to be understanding and patient with your partner as you introduce budgeting, especially if they weren’t part of the initial decision. Nobody wants to feel like somebody is controlling their spending and that isn’t a role you want to give yourself either.

Why Are You Creating A Budget?

Take some time to reflect on why you are putting together a budget. What are you working towards or wanting to change? Getting clear on your why is going to help you when the budget begins to feel daunting and you want to quit. Having clear goals and a vision for your money is going to get you through those last few days of the month when you have hit most of your spending limits.

Monthly Money Talk

Monthly money talks are a great way to come together to go over what you have spent, what you have saved and what progress you are making towards your goals. A monthly money talk doesn't need to be a big deal, it can be a quick check in over breakfast Saturday morning. This is where you and your partner can talk about adjustments you need to make and things coming up that are outside of your regular monthly bills. If you have kids include them in the conversation (when appropriate). When we take away the stigma and secrecy of money we can begin to shed the shame we may feel around money.

Keep It Realistic

Small progress is progress and I’d rather see you take small steps everyday that will lead you to long term success than set yourself up for disappointment. When you are new to budgeting it can feel like you need to cut out anything seen as frivolous and I am here to recommend you don’t do that. Setting small goals with your money is going to give you quicker rewards and drive you to continue with budgeting each month.