June 17, 2015
Social Today we’re getting into the nitty-gritty of HOW to create a family budget. We’ve done budgets and had to revisit them. We haven’t always been consistent with keeping a budget with moves and job transitions. But when we are budgeting, the stress in our marriage is much lower! First, let’s clarify what we know from what we don’t know. We know: That there are many sound, recommended financial practices That these practices come from reliable sources That following these financial practices actually works and produces greater net worth and increased life satisfaction That only a minority of people uses them. Which leads us to what we don’t know: We don’t know why we frequently do not use them We don’t know why, when we do use these tools, we don’t always use them properly. This scenario is typical for most families.[i] So let's talk about discussing your budget and the role that personal qualities play in the likelihood of your success in establishing a budget before turning to the steps by which you'll create your own budget. Discussing Your Family Budget It’s difficult to have a productive discussion about the budget itself because most couples do not discuss the meanings they give to budgeting. So have a discussion with your spouse to get this stuff out on the table. Don’t fight about what to spend or attempt to talk to each other into budgeting, just aim for understanding. Your spouse is not on board? This is not the time for hot debate. Rather, seek to understand WHY your spouse does not want to actually follow through with the budget. What is the meaning behind the resistance? It's been my experience (Caleb) in working with couples that there is often a valid reason why resistance is present. You need to do this because it’s no fun banging out an awesome budget only to have your spouse say, “Good for you! Let me know how that goes!” That sucks… So make sure you’re on the same page by having a good discussion first. Often if you can get to a discussion at the meanings level, you'll be able to connect and get on the same page. Listening to understand is a vital skill for this type of conversation. Remember, you’re not alone. If you can’t settle on this together, reach out for help and we’ll set up some coaching. Understand Personal Qualities So after you’ve discussed and understood the meanings you each ascribe to budgets, the next step is to grasp the impact your personal qualities have on budgeting. For example, discipline (as a quality) and knowledge (of financial matters) are qualities that impact one’s ability to establish and follow a budget. Possessing these qualities will help you make progress against your financial goals.[ii] If you don’t feel you have these qualities: don’t fret. It's gonna be ok. What this means is that budgeting is possible for everyone who wants to do it because personal qualities can be developed and action is a result of choice. Anyone can make choices. So be encouraged! Have a good conversation to find out where each of you are at, then make decisions together and take action. Again, it’s not unrealistic to think that you might need to reach out for help. Creating Your Family Budget Caleb blended content from both the Australian government (ASIC)[iii] and Dave Ramsey to provide a robust description of how to create your budget in this episode.[iv] Both resources are really valuable, and we’re taking the best of both of them and blending them because they really get along well. We know it can be overwhelming to create a budget, so let’s break it down. There are four steps here: Track your current spending Compare money in and money out Prioritize where you want your money to go Take steps to make your money work for you. [callout]Get instant access to the MS Excel Family Budget Worksheet! If you’re the type of person that prefers to work with a template that is already laid out, we have an awesome Microsoft Excel workbook we’d like to email you a link to.
