This is not just an excuse for me to again proclaim my love for Excel Spreadsheets...although I do have deep affection for the ways that the columns all line up and you can set up equations and carry sums from one sheet to a different sheet and...I digress.
At the core of the Budget is this truth: Money is Slippery. It comes and goes quickly and modern technology makes commerce easier than ever. The world is available to us and there are a lot of really great things that we could buy. The goal of the Budget is to take a look at our cash flow and be intentional about where the money goes. If we do this, our money is a great tool towards living the life that reflects our priorities and values. If we don't do this, we end up with lots of things that don't last and that we don't want and our credit cards morph from safety nets to heavy anchors.
What makes a Budget work? Here are a few ideas:
- Have some money and some money coming in. No resource means that your budget is really just an aspirational wishlist of what you might want to do someday.
- Be Honest. Brutally honest. Be honest about what you actually bring in and what things actually cost. If your cell phone bill each month is actually $95 don't say that it is "about $75." If your monthly income is $1,564 don't call it "about $1,600." If you need to round in order to keep track of numbers in your head, round down on income and up on expenses so the income would be $1,550 per month and the cell phone bill would be $100. It is better to end up with too much money than not enough.
- Savings are part of the Budget. Savings are what keeps problems from becoming crises. Stuff happens. Unforeseen stuff happens, like the power steering system of your 10 year old car dying and requiring $2,000 to fix and having to choose whether it is worth that investment or whether you should look into a different vehicle...as a hypothetical, random example.
- Giving is part of the Budget. If it is part of the money coming in and going out of the accounts, it is part of the Budget. If you have regular monthly places that you like to give, great. That's easy. If you lean more towards spontaneous giving and feel shackled by planned giving, that's ok too. Allot how much you can give per month and set it aside. You can pull it out in cash or set up a different bank account just for generosity. One of the primary benefits of simple living is clearing up more space to give away money to great causes.
- Follow the budget. The paper (or spreadsheet) is only as useful as the person applies it. If you put down $50 for gas each month but really spend $75, then adjust the budget or the driving but stop lying to yourself about what you are spending. Exceptions will arise but if exceptions are the norm then they are your new standards.
- Communicate. This is for those of us who share a bank account. A Budget can not just live in the mind of one of the partners. You don't have to both revere Excel, but you need to both live by the same budget or else you are setting up a volatile mixture of resignation and frustration. Find a format that you can both read and understand so that you can talk through what will actually work.
- Money, and specifically the Budget, is meant to be a Tool, not a Master. Your money is meant to enable you to live according to your principles and priorities. Treat it as a tool, not the final objective. The bigger question should be "What kind of life do I want to lead?" The ideal budget will reflect the answer to that question.
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