There's a truth about budgeting that a lot of people choose to ignore.
Creating a budget simply to create one gives you the appearance that you have your financial life in order, but the hard truth is – if your budget doesn't make sense to you, you will never use it.
You will be surprised how many people make a budget purely for the quick satisfaction of just having something written down. It doesn't matter if the budget template they are using applies to their life, or if the numbers are even accurate. The idea of having a budget trumps reality.
Before sitting down to create a budget, it's important to answer a few questions first. Not only will it help with the creation of your budget, but it will ultimately give you the motivation for sticking to it.
Here are five critical question you should ask yourself before creating a budget.
WHAT GOALS DO YOU HAVE?
Ultimately, your money is your money. As long as your monthly expenses are taken care of, and you have more money coming in than going out, you are off to a good start. BUT, take it a step further than that.
Think long-term rather than short-term. Setting and having a budget isn't something that can just come and go as needed. The point of a budget is to help you stay on track, to help you with an end goal.
Think long and hard about what your end goal is with your budget. Keep in mind that your budget should be something obtainable and realistic for you. Don't set a huge lofty goal right out of the gate that may cause you frustration. Make sure to create baby steps along the way to reach your ultimate savings goal!
WHAT ARE YOUR “HAVE-TO” EXPENSES EVERY MONTH?
This can be the hard part, but you have to take a look at your current expenses that are “a must” to pay.
Write down all your loans, your bills, anything that you owe. Take a good look at those expenses. Then, write down an estimate of your variable expenses every month as well. These can include your utilities, groceries, and things such as that. Variable expenses are bills you know you have to pay, but they can vary a bit.
Once you have all those added together, you know that combined, those are your responsibilities every month. Your “must-pay without a doubt” expenses. These are key to creating a budget because these figures are factored in monthly to know then what is left over for use or saving.
IS EVERYONE ELSE ON BOARD WITH YOUR BUDGET?
If you have a family, it's crucial that the family is also aware and on-board with the budget.
You can't have a split house on this one and expect your budget to last long-term. The key to making your budget work is to communicate with the other members of your household. Explain the situation, let them understand the importance of having a budget, and ask them for their help and support in sticking to that budget.
You can't expect someone to fully accept a budget or a plan if they don't know the end goal as well, right? Communication is key.
HOW OFTEN WILL YOU REVIEW YOUR BUDGET?
Life happens, and our situations can change quickly.Understand that setting a budget is essential, but it can also be altered if needed.Click To Tweet
If your income changes, if your expenses suddenly vary, then your budget needs to be reviewed and possible changed. Allow yourself that flexibility. Try not to make it a habit to alter your budget unless circumstances outside of your control give you reason to make changes, but if that is the case, just trust that it can be done.
WHAT HAPPENS IF YOUR BUDGET FAILS?
Understand that we all fail. You aren't alone in this thought.
If your budget happens to stumble one month, make a mental note and get back on track as quickly as possible. Don't lose track of your end goal because of a few little hiccups here and there.
You know that budgeting takes work, and with work comes highs and lows that accompany it. Take a deep breath and focus on the fact that you have had more highs, than lows, during your budgeting journey and focus on those wins.
Then, dust yourself off and get back on your budget track. Tomorrow is a new day to start again!
Creating a budget is a great way to keep you and your family on track towards financial freedom. By asking yourself the questions above, it can give you a good outline of things to think about when preparing to create, or alter, your current budget. Allow yourself the ability to set a budget that works for your household, and be positive about implementing that budget.
What are some of the questions you ask yourself before creating your money plan? I want to read them in the comments below!