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Kids and Money Tip: No Spending Until You Prepare A Budget

Money is a foreign concept to most children until they are about 4 or 5 years old. It is at around this age they become aware that money has the ability to purchase things. However, most of their financial knowledge is focused on spending because that is what they SEE happening with money.

  • Mom gives money to the grocery store clerk and carries groceries out of the store.
  • Dad swipes his credit card at the gas pump, and it allows him to put gasoline in the vehicle.
  • Grandma gives money to her beautiful grandchildren (your children, of course) and you take the child down the toy aisle to buy something with it.

Since “spending” is what we see happening with money from our earliest days, it is what most children grow up knowing about money. For them, money equals spending.

The important financial principles of giving, saving, investing, and budgeting are not learned. Consequently, grown children leave the house knowing only that money equals spending. This is a recipe for financial disaster!

Here’s a simple thing you can do immediately to change that for your children (grandchildren):

Ask the child to prepare a budget for any money they receive – BEFORE they are allowed to spend any of it.

For example, my daughter receives money for her birthday. She and I count the money so we know exactly how much she has received, and then I confiscate it. Upon receipt of a well-planned budget, I release the money to her for use. Later on, I do a “check in” to ensure the money has been used according to the plan.

In a recent budgeting moment, my daughter was planning the use of $20. Her first budget had $2 for giving, and $18 for spending. I rejected it because there was no saving or investing. Her revised plan showed $2 for giving, $0.25 for saving, and $17.75 for spending. She gave the budget to me with a smile – knowing there was little chance of it being accepted.

I rejected it.

Her third try included giving, saving, investing, and spending. I released the funds to her.

Here’s the reasons I love this process:

  1. Teachable Moments This process creates space for “teachable moments” about money. It forces conversation about the importance of giving, saving, and investing. It allows us to talk about the “spender” mentality that we both share.
  2. Learned At Home Before my daughter enters the real world, she is receiving real financial knowledge that will set her apart. She knows what a mutual fund is and how it operates.
  3. The Pain of Wasting $20 is Less Than The Pain of Wasting $20,000 I want her to recognize the pain of poor financial decisions NOW when she is making $20 decisions so she doesn’t have to learn the lesson with a $20,000 purchase later.
  4. My daughter actually enjoys the process My daughter actually enjoys the process. It has helped her save a substantial amount of money toward her first car. She has financial margin. She knows her parents care about her.

I have my daughter use our FREE BUDGETING TOOL called the “Mini-Budget.” It’s perfect for kids.

My book, What Everyone Should Know About Money BEFORE They Enter The Real World, is a perfect resource for helping your child start out life with the financial tools and principles essential to life.

I Don’t Know How To Budget

“I don’t know how to budget.”

I’ve heard this sort of statement thousands of times.

Let’s face it. We all know we would be better off if we prepared and lived by a budget. But for some reason, the vast majority of people choose to operate their financial life without this important financial foundational tool.

The reasons can come in hundreds of ways, but when boiled down, there are really two reasons people don’t operate by a budget:

  1. They don’t know how to budget.
  2. They know how to budget, but choose not to do so.

We’re working to prepare a resource that will help equip people to prosper with a budget. Will you take 60 seconds and share your budget experience with me?

 
Can’t see the survey? Click HERE to take the quick survey.

The #1 Lie About Why A Budget Won’t Work

Most people believe a lie about why their budget doesn’t work. It’s a sinister deceitful lie. Ready for it? Here it is:

“I just need to make more money to make my budget work.”

Of course, having more money sounds phenomenal. Given the opportunity, all of us would sign up for more income. However, more income is rarely the issue with a person’s budget. On the contrary, it’s the way they manage their outgo.

But we still like to believe that the problem is our income. It’s sinister and deceitful because it allows us to take a “victim status.” If our problem is income, the solution becomes someone else’s responsibility. It’s our bad boss’s fault. It’s our spouse’s shortcoming. It’s the mean company’s greediness. It’s the rich people’s insensitivity. It’s the government’s failure to protect the “little guy.”

However, if we were to take full responsibility for the the outgo by preparing a budget and (gasp!) follow it, denying ourselves some immediate gratification, and working more diligently to maximize every single dollar, we might just discover our income has been sufficient all along.

And by saving and investing every time we are paid, we will see our income increase over time through the power of compound interest.

Don’t believe the lie.

Get started with one of our FREE BUDGET TOOLS and put together a plan that allows you to prosper with your current income.

15 Negative Words And Phrases People Use To Describe Budgeting

One of our core financial foundational principles is the importance of budgeting. Many people, however, really despise budgeting. They use many negative words and phrases to describe budgets and the budgeting process.

15 Negative Words And Phrases People Use To Describe Budgeting

  1. Joy-robbing experience
  2. Frustrating
  3. Impossible
  4. Horrible
  5. Terrible
  6. No-good-very-bad
  7. Awful
  8. Depressing
  9. Worthless process
  10. A reminder of the fact that there’s never enough
  11. Clueless
  12. Challenging
  13. Painful
  14. I’d rather go to the dentist for a root canal
  15. Get ready for a money fight with my spouse

It doesn’t have to be this way! I used to think all of these things (and a few more that I didn’t list) about budgeting, but I discovered how to make budgeting work for me and my family.

I’ve prepared a YouTube Video to share some of the key things that helped me have a budget that actually works! WATCH THE VIDEO and then download one of our FREE BUDGET TOOLS.

15 Alternative Words And Phrases To Use When Describing Budgeting

Many people despise the idea of budgeting. They feel it is very challenging and restricting. As a natural born spender, I used to feel the same way. In fact, I came up with poetry to describe my view of budgeting and financial planning.

My name is JOE.
Budgets make me say “NO.”
That interrupts my FLOW,
So the budget’s got to GO!

While I’m not making plans to become a full-time poet any time in the near future, I’m confident many people will agree with the sentiment of my literary work of art!

I’ve discovered that budgeting actually is the most FREEING thing I’ve ever done with money. It’s freed me of stress, given me a longer-term perspective, and helped me avoid tons of horrible financial mistakes.

Here are 15 Alternative Words And Phrases To Use When Describing Budgeting:

  1. Financial Planning
  2. Cash Flow Planning
  3. Financial Stress Reducer
  4. Impulsive Decision Preventer
  5. Motivator
  6. Marriage Uniter
  7. Dream Funding
  8. Money Maximizer
  9. Earmarking
  10. Provisioning
  11. Opportunity Maker
  12. Obstacle Destroyer
  13. Freedom Giver
  14. Fun Finder
  15. Money Management

If you want your budget to WORK for you, then you must WORK your budget! Start with one of our FREE BUDGET TOOLS.

10 Reasons I Love Budgeting

I love budgeting.
Let me count the ways.
My budget set me financially free.
For the rest of my days.

10 Reasons I Love Budgeting

  1. Reduced stress.
  2. Clear plan for the future.
  3. Intentional generosity.
  4. Focused savings.
  5. Anticipate future expenses.
  6. Same page as my bride.
  7. Allows me to maximize every dollar.
  8. Funded my dreams.
  9. Blessing my children.
  10. I can use a Microsoft Excel spreadsheet.

Do you love budgeting? Why?

How To Prepare A Budget That Works

One of the greatest challenges people face with their personal finances is preparing a budget that works.

They either put together a budget that does not work, or they can’t even find time to even prepare one.

Sound familiar? If so, read on to discover some tips to help ensure you are able to prepare a budget that actually works.

  1. Decide to decide  Until you decide that budgeting is crucial to taking your finances to the next level, you will always find a way to avoid this “unsavory” task.
  2. Establish a set time every month  When you put “budgeting” on your to-do list AND on your calendar, you create a “trip point” that ensures you don’t forget this important task.
  3. Be realistic  Don’t be ridiculous with your spending plan. If you say that you are not going to spend money on restaurants this month and only $7.25 on groceries, you are LYING TO YOURSELF. Establish a reasonable budget that includes giving, saving, investing, paying the bills, and some fun.
  4. Prepare the budget BEFORE the month ever begins  If you start spending your paycheck before you plan the budget, you will inevitably practice the ancient art of “making your money disappear.” Choose to prepare a budget about 3 to 7 days before your financial month begins.
  5. Work together  If you are married, work together on the spending plan. Chances are pretty high that one of you is a saver while the other is a spender. Use the word “balance” a lot as you approach your budget.
  6. Keep the end in mind  Remind yourself about the “why.” Why are you preparing a budget? What plans, hopes, and dreams will be more likely to happen as you become a better money manager?
  7. Plan ahead  There are several non-monthly expenses that you know are approaching you. Known Upcoming Non-Monthly Expenses (KUEs) like vacation, property taxes, car repairs, Christmas, special days (like anniversaries, weddings, baby showers, and birthdays) are approaching. Save for them monthly so that they do not derail your budget.

Employ these 7 tips, and your budget will begin to be the financial tool you need it to be: one that helps you fund your plans, hopes, and dreams.

NOTE: The I Was Broke. Now I’m Not. Core Coaching Program (IWBNIN CCP) is a 12-month intensive personal finance equipping course. The last round of the IWBNIN CCP sold out in just 15 minutes! To be among the first to be notified when this program is relaunched, visit HERE to be placed on the list.

I Love My Budget

I love my budget.

There. I said it. If you are a spender like I am, you know that this statement is an amazing one.

You see, as a spender, I didn’t like the word “budget” because it cramped my style. It made me say the word “no” too often. For some reasons, the word “budget” made me think of being broke.

But I love my budget because NONE of those beliefs were true.

Here are the top reasons I love my monthly budget:

  1. My marriage.  It ensures I meet with my bride every single month to talk about life and how our money needs to be managed to support it
  2. Debt eliminated.  Using the budget, we eliminated all of our non-house debt in 14 months and our house debt in 10 years and 1 month (so we can live without payments)
  3. Savings! Our budget allowed us to clearly understand what would be necessary to build savings
  4. Giving! We get to decide where we will give money each month (it’s our favorite part of budgeting)
  5. It provides control. In a world where everything seems to spiral toward chaos, it is awesome to know exactly what is going on with our finances

Why do YOU love YOUR budget?

Don’t have one? Just click HERE to access our free budget tools.

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How To Prepare A Budget That Works

There are a lot of people who struggle with budgeting. They know theyshould have a budget, but there never seems to be enough time, energy, or money to prepare one.

I know the feeling. However, I also know the feeling of not having control of my money and always running into financial disasters toward the middle to end of each month. It was in December of 2002 that I experienced my IHHE Moment (I Have Had Enough Moment) and resolved to figure out a way to gain full control of my money. By July of 2003, I figured out a way to make budgeting work for my family. Below are the steps I put into place. If you put them into place, I’m confident this budgeting process will work for your household too!

  1. At least 3 days before the month begins, make a list of all your expected income and expenses for the upcoming month.
  2. Pull up the FREE BUDGET TOOL. Enter the income and expenses into the worksheet.
  3. Modify your income/expenses to ensure that the following formula is true: INCOME – OUTGO = EXACTLY ZERO

It really is that simple.

However, before you dive into preparing your best budget ever, I urge you to consider a few tips I’ve learned along the way:

  1. Prepare the budget BEFORE the month begins (before you get paid and start spending money). It is very difficult to prepare an effective plan in the midst of already spending it!
  2. Be realistic. I found that my previous attempts to budget failed because I was lying to myself and not being realistic.
  3. Put some fun in the plan. It really is okay to spend some money on FUN – as long as you aren’t mortgaging future plans, hopes, and dreams in the process.
  4. Use cash envelopes or a pre-paid gift card for categories where you have a tendency to overspend. This has worked wonders for my budget! The categories I use cash envelopes for are groceries, restaurants, clothing, spending money, and entertainment.
  5. Recognize that you will forget some expenses – especially in your first few budgets! I’ve seen many people address this by putting a “I forgot!” line item in their budget to cover these forgotten expenses.

Now go put that budget together, and start winning like never before!

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5 Reasons Why Budgeting Is Important

“You need a budget.”

Chances are pretty high that you’ve heard that statement before.

If you are a saver, your heart started beating wildly (because you LOVE budgets). If you are a spender (like me), you probably felt the hair raise on the back of your neck and immediately felt flashes of frustration.

So this post is written primarily with the spender in mind. Savers: feel free to print out and show to your spender spouse or friend!

5 Reasons Why BUDGETING Is Important

  1. It maximizes every dollar you earn.  As a spender, I can “accidentally” spend money. Preparing a monthly budget (and an annual budget once each year to cast vision for the future) allows me to know that money is limited and ensures that I maximize every dollar I do receive.
  2. It makes you aware of your impulsiveness.  This is not the most pleasant feeling, but it very helpful to be reminded that it is much easier to remain broke than it is to win with money. My budget ensures that I am continually aware of my impulsiveness and the danger that presents to my long term goals.
  3. You can buy stuff without feeling guilty.  This is probably my favorite reason for budgeting! I used to play a round of golf and feel guilty because I knew it wasn’t in the budget (because we didn’t have a budget). I’ll never forget the day that I was able to just go enjoy a round of golf and KNOW it was in the budget and I had planned for it! It didn’t help my golf score, but it did help me and my marriage!
  4. You have probably married a saver (or if you aren’t married, and hope to be some day, you will most likely marry a saver)  I married a saver. Jenn is a beautiful and amazing bride, but she just does not have any desire to go spend all of our money. So when we didn’t have a budget, I nearly drove her crazy with my random ATM cash withdrawals and surprise expenses. I am certain she was the one celebrating the most when I finally “got it” and began participating in the monthly ritual of planning our spending and following that plan!
  5. Budgeting will fund your dreams faster.  I know that I said #3 is probably my favorite, but I’m taking it back. This one is my favorite! I love funding my dreams. Because of budgeting, my family has been able to give more money away than we ever thought possible. We have been able to take wonderful cash-paid-for-in-advance vacations, pursue our dream of launching this organization, and pay off our house! All in 10 years and 1 month! I can’t WAIT to see what happens in the next 10 years!!!!

There’s my list. What would YOU add to it?

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How To Stick To Your Christmas Budget

Is it a challenge for you to stick to your budget while shopping for Christmas? If so, then here is a great way to ensure you do not overspend this year!

1.  Using the Mini-Budget, prepare a list of each person for whom you are planning to purchase a gift.

2.  Next to each person’s name, enter an amount that you are planning to spend for their gift.

3.  Look at the total amount of the gifts and ensure it fits within your plan. Make necessary adjustments.

4.  Enter the “Total Income” to make “INCOME – OUTGO = EXACTLY ZERO” and pull the money out in CASH to ensure that you do not overspend!

While this seems really basic and simple, it has really helped my family stick to the plan and ensures that our Christmas spending will not rob the joy of the season from us!

Here are a few additional tips for your Christmas budget:

  1. Home made items are way cheaper and usually end up meaning a lot more
  2. You are not REQUIRED to spend gadzooks amount of money for Christmas – especially when you are working your way out of a financial mess!
  3. Using cash and putting away the credit/debit card will ensure that you do not overspend!
  4. Facing a cash crunch this Christmas because you did not really save for it? Commit now to save every single month for Christmas 2013! You can set up a “Christmas Club” automatic savings account at your local bank or through an on-line bank (like ING or ALLY). Figure out how much you should save each paycheck by using our “Known, Upcoming Non-Monthly Expenses Calculator.”

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5 Ways To Ensure Your Budget Won’t Work

My budget is the reason my family stopped being broke and began winning with money. As a spender, one might think I would be opposed to the restrictions of a budget, but the opposite is true: my budget gave me freedom! Yet many people operate their finances without a planned budget. They are hoping to prosper, but that is a tall order without a written plan.

Since many people resist the idea of a budget, I will share five proven ways to ensure a budget won’t work.

5 Ways To Ensure Your Budget Won’t Work

  1. Don’t prepare a budget  This is the top proven way to ensure your budget won’t work! Just “hope” that it somehow works out.
  2. Be unrealistic  Decide to spend only $4 on groceries this month and ignore the fact that your children are growing like weeds by putting $0 in the clothing category.
  3. Don’t include Known, Upcoming Non-Monthly Expenses  Ensure that landmines are established for your budget by failing to save for known, upcoming non-monthly expenses like Christmas, vacation, property taxes, insurance premiums and deductibles, and home and auto repairs.
  4. Don’t allow your spouse to help  Believe (the lie) that your spouse is the reason you aren’t winning with money and prepare the budget on your own and demand they follow it without any question. You will ensure your budget doesn’t work.
  5. Be impulsive  Give in to salesperson’s great sales pitch and buy the shiny item. It is so pretty, and they told you that it is necessary to own the item to be happy. What they didn’t tell you is it would ensure your budget won’t work and keep you broke.

If you really DO want your budget to work, I recommend you start HERE.

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Budgeting And Saving Tips

Looking for ways to save money? Here are a few that can help!

  • Coupons.com has a lot of great coupons that you can print out
  • MyCoupons.com has a lot of great information on deals that are being found at various stores
  • Buy off-brand items.  Yes, some will taste like sawdust, but others are identical to the name brand.  If you have an ALDI grocery store in your area, it is worth the drive to purchase groceries there.  We save at least $50 a month by buying our essentials there – milk, bread, canned foods, eggs, etc. As a side note, their eggs can be somewhat non-uniform – I get double-yolk eggs, oblong eggs, and wobbly eggs. It is really interesting.
  • Skip the grocery store for one week. Put together meals from stuff that is in the cupboards and freezer! You will enjoy some concoctions you have not had in awhile (or never), AND you will be able to save a week’s worth of grocery money to put toward your emergency fund!
  • Have the kids mow the lawn and maintain landscaping instead of paying someone else to do it. Pay your kids and teach them how to save, give, and spend their money!  Can you spell, “LEARNING OPPORTUNITY?”
  • Cut your kid’s hair. This will save many families $20 – $40 per month!
  • Visit consignment stores, Goodwill, or Salvation Army Thrift Stores. You can find some great deals on clothing!
  • Shop your insurance for quotes. Get at least three quotes and obtain one of them from an independent insurance agent. You may be able to save $100 – $500/year on your insurance!
  • Take a low-budget vacation instead of a $3,000 one. Using creative options, you will discover just as much fun, and you may be able to save $2,000 – $2,500 which can then be used for debt reduction, emergency fund, or retirement fund!
  • Wait one day before making a major purchase decision. This will really help you to avoid “impulse” purchases like a new car, a pricey vacation, a new plasma TV, etc.
  • Eliminate the home telephone. So many people have cell phones that the home phone has become virtually obsolete. For basic home telephone service you will pay $25/month, and it will not come with basic features of a cell phone such as free long distance, caller-id, call waiting, voice mail, camera, text messaging, games, etc. If you need a basic phone for emergencies, I like the MagicJack.
  • Get rid of the movie channels on cable.

I would love to hear more ideas on how you can save money!

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First-Time Budgeting

I remember our first-ever budget. It was in July 2003. My fine bride, Jenn, came into the living room with a budget scribbled on a piece of lined paper. She had been trying to get me to budget for the past 6 months or so, but I was not playing along (because I’m a spender!).

I believed budgets were controlling, restricting, live-in-a-Maytag-refrigerator-box pieces of trash. They made me say the word “no”, and it interrupted my flow. I wanted no part of it.

But let’s consider a snapshot of my family’s financial situation when Jenn walked in:

  • I was managing the money
  • We had $4.13 in our checking account
  • Our credit cards had a huge balance on them again – for the third time!
  • We had a 105% financed car and a 100% financed truck
  • There was nothing in our short-term savings account
  • We were B-R-O-K-E
  • I was in COMPLETE DENIAL!

I can not write this strong enough: I was B-R-O-K-E and telling my wife, “NO!” to doing something different with our finances! But, for some reason at that very moment, something happened that changed my life and marriage forever. I turned off the TV and looked at the budget she had prepared. It actually showed we could live for a month without incurring any additional debt!

LIFE-CHANGING does not describe the next few minutes. I moved into the computer room and started entering the expenses into Microsoft Excel. As I was putting together the formula to subtract expenses from the income, I realized that all of this time I could have been managing my money with the math skills possessed by the average first-grader. INCOME – OUTGO = EXACTLY ZERO! After a few minutes, we had a budget that was EXACTLY ZERO.

My life and marriage have been changed forever because we discovered that a budget is NOT restricting. It is freedom!  It is merely telling your money where to go instead of wondering where it all went. It allows you to pay off debt, save up for known, upcoming expenses, save money for emergencies, and fund your dreams.

The first budget was tough because not everything went according to the plan. Every month we had been spending an enormous amount at Wal-Mart and did not clearly know what we had spent it on. As a result, our first month was a little rough. Month two was a bit easier.  Month three was even easier.

Listen to your feelings as I write this next line: We don’t worry about money ANY MORE. We did something different. We applied God’s word and Grandma’s advice to our money and our lives have never been the same.

You CAN do this! You CAN get through the 1st month’s budget! Click on “TOOLS” at the top of the page or click HERE to download your FREE budget form and get started!

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Need further help? My book, I Was Broke. Now I’m Not., provides the exact tools my family used to win with money. It will help you do the same. Learn more HERE.

Irregular/Seasonal/Cyclical Income Budgeting – Part 1

There is a large group of people whose family economy is powered by irregular income.

Real estate agents, hair stylists, commissioned salesmen, and business owners all experience cyclical income.

Folks who live with this type of income often tell me that it is impossible to budget.  They say that they have no idea how much they will make this month, so it makes budgeting impossible.

I say that not only is it possible, but people with irregular income need a budget more than anyone!!!

In this series of posts, I will explain how to budget with irregular income.  Here’s a hint – It’s EZ!!!

Step 1 – Recognize it!

You must recognize that you have irregular income!  If you have ever starved to death during the “off” season, you KNOW what I am talking about!  In order to stop having your life severely impacted by “off” seasons, you must prepare!

Question of the Day:  If your family economy is powered by irregular income, what do you do to prepare for “off” seasons?

Looking for additional Personal Finance Resources?  You can obtain free tools by clicking HERE and purchase books/materials by clicking HERE.

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