Time to test the gold in fire.
Earlier I told you that a well designed budget would be the key to money management and staying within your means. This is still true. If you’ve created something that is tailored for you, meets your goals, and is comfortable enough for you to live with, then you should do well.
All of this would be great if “you” were the only person this budget was for. The problem is that it’s not just “you”. A budget is usually for you, your spouse, and your family. Although that doesn’t sound like a lot, there’s a lot going on inside that group. Just like how a company sets a budget, each department will likely have competing goals and agendas. Similarly, sometimes each person in the family feels differently about how the money should be spent and what the budget should accomplish.
A plan isn’t worth the paper it’s printed on if no one sticks to it. Thus, no matter how well designed your budget is, everyone has to buy-in for it to work.
So how do you make sure your budget will be a success?
• Align your goals. If you don’t want competing agendas and goals, then talk them out ahead of time and work out a common set of objectives. No one is going to buy into a one-sided plan. The budget should accomplish as much as possible for everyone involved.
• It can’t be just one person carrying the torch. One person can’t do all the saving and sacrificing. Everyone has to have something to lose if the budget fails. Make sure that everyone is a stake-holder.
• Keep the communication open. Talk about your progress with your family and spouse. If you never seem to find the time, then use a passive method such as emailing or texting them. Let them know where you (as a group) stand for that week – good, bad, heading for trouble, etc.
• Set some goals or rewards. Make it fun! If you’re under budget for the month, use the extra money for a reward or activity. It doesn’t have to be all flat-screen TV’s and diamond rings. How about a nice meal out? Remember that a little bit of incentive keeps things interesting and helps keep people motivated.
• Let the facts speak for themselves. If you’re seriously heading for debt, tell your spouse and have an adult conversation. No games. Let the facts show that trouble is coming. Throw as many ideas on the table as possible. Don’t be judgmental or lay blame.
All in all, if you and your family can stick to your well-designed budget, you should have a road map to success. Use it to determine what your bottom line will be for every month throughout the year, what it will do if you add in new investments (or expenses), and avoid trouble long in advance.
Back to the Credit Cards
From time to time, you’re going to want to squeeze your budget to try to hit some more goals. And your credit card expenses will be the first and best place to look. In the next section, we’ll learn how to use Mint.com to help us with this task.
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Photo Credit: Microsoft Clip Art