How to make a budget plan that will work for you part 1
In this multi part series, I will help you become intentional about your money. We will start with the big picture by creating a budget plan. then we will use budget plan to create more specific plans with monthly and weekly goals and budgets.
People often come to me for advice about making a budget plan that works. This is both cool and frightening, I hate being responsible for other people’s money and I feel a great deal of responsibility when people ask my opinion. Speaking of which, this article is 100% my opinion that I have created it after reading hundreds of other people’s advice including some here, and here. I have spent about 10 years trying to put that advice into action in my own life. Now I want to encourage you to achieve the same success I have with managing money! I do suggest you talk to a professional if you have concerns about your situation.
~~~I do suggest talking to a professional if you have concerns about your situation. ~~~
To get started, let’s look at the answers to the main questions people ask me when they are working on a budget plan. You will also find my quick answers to help get you on the right track.
How did you get out of debt?
Strong will and determination along with a budget and hard work. I was able to keep my focus because of the larger goals I had and my budget plan that helped keep each month in focus.
What is a Budget Plan?
A budget plan is the big picture of how your individual monthly budgets will help you achieve your overall financial goals. One example is deciding to hold off on contributing to retirement while you pay off student loans. Another example would be the choice to spend money eating out or save money by cooking more at home.
What is the best way for me to make a budget plan?
To make an effective budget plan you need to ask yourself four main questions: What are my goals? What are my habits? How willing am I to be uncomfortable? And how will I stay accountable?
I suggest writing down the answers to these questions with pen and paper, somehow it makes them feel more official. Include both short and long term goals.
Examples of goals:
Be able to take a sick day without worrying, become debt free, buy a car with cash, pay for my kid’s college, pay for braces for myself and for my kids, take a vacation, pay for a nice wedding, and buy a house.
Examples of “money habits”:
I am a spender, I like to keep X amount of money in my checking account so I don’t worry, I am an impulse buyer, I am a saver, I like to see a lot of improvement quickly, I like to go out with friends, I like to use money to help people, I often have to spend money to help my family.
Examples of questions to ask yourself about your level of comfort:
Am I willing to go without eating out? Can I give up extra driving? Am I willing to move? Would a job change be beneficial? What can I give up or scale back on?
How will you stay accountable?
Accountability is very important. Finding an accountability partner may be hard, but it is worth it. Some people have a willing partner who they can count on to keep them accountable with budgets and budget plans. If you are single or otherwise on your own when it comes to budgeting here are my suggestions to find an accountability partner: Look for someone whose habits you can look up to. Ask them if it is ok to talk to them about money. If they are willing, ask them questions about how they got where they are financially. If your potential accountability partner seems to have similar values to you ask them to be your official accountability partner. When I started my debt free journey, my uncle was my go to for questions. Then a friend was an accountability partner. Later my husband became my day to day accountability partner and co decision maker.
A note on staying accountable.
The best way to stay accountable is to become an accountability partner for someone who is one step ahead or behind you on the journey. If you have paid off your first debt reach out to someone who is just starting the journey and see if you can become partners. Or reach out to someone who you know has been killing debt (successfully) for a while. Have partners one step from where you are will help keep you motivated.
I do not recommend using your parents as your accountability partner.
While you wait for part two of this post take some time to reflect on your goals and find your accountability partner!
What is your biggest struggle with budgeting?
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