Starting a budget can be overwhelming and even scary. But I promise you, starting a budget is one of the best things I’ve ever done for my finances. I follow it loosely now, but I never would have gotten a handle on my money if I didn’t start closely paying attention to where every dollar of mine went in the beginning.
Today’s post is written by Josh. Josh blogs over at Faith Family Finance and is passionate about helping people understand the impact their money choices have. Read on for Josh’s great advice!
Photo by NeONBRAND
I know you are probably tired of hearing about budgets – how they are good for you, blah, blah, and more blah. However, let me just say that they are good for you and will help you gain control of your financial situation. That doesn’t sound so different than blah, but think of it differently.
Everyone’s financial situation is different. After all, there are even a few different budget categories for different people, so it’s reasonable to say there’s no encompassing formula for a budget. One person’s budget isn’t going to apply to another person’s life, so some pieces of budget advice could sound unhelpful while others could revolutionize someone’s life.
With that said, it almost seems foolish not to read up on budgeting stories! Relating someone else’s experiences to your own is a great way to find out what could and could not work for your own financial situation.
Now that I hopefully have you on the budget train, I want to talk about some of the considerations I have made when creating my plan. You may want to consider some of these things too, or maybe you already have some of these ideas in mind. Let’s take a look.
1. Make Sure to Save
One of the things that I ALWAYS tell people is to save as much money as they can. This is a no-brainer of course, but it’s so important that it needs to be iterated all the time. Saving in general sets the basis for any financial goal whether you know your goal yet or not. I try to save as much as possible.
As consistently as I can, I set aside a minimum of 10 percent of my income into our savings account. Since I do have some side hustles, I try to contribute more than usual to my savings, especially if I have a good month. Of course, everyone is different. Some people have additional income options available to them while others have just their income. How much you save depends entirely on what you can bring in, but just know that you should start consistently putting away some money soon.
2. Don’t Forget About the Church
If you have been reading my articles and following along on my blog, you already know that I am and was raised as Roman Catholic. I believe that tithing to the church is important. While saving money is important too, I think that being generous and humble with your money is equally important. My church and its members have always been there for me when I needed someone, so I feel a responsibility to give back.
Some people would think strongly against donations if you are trying to establish a budget. To me, it brings me peace of mind to donate to a cause that helps people, and in a way, it calms my soul. I can work better and feel better doing this. To be safe, I have made sure to work my tithe amount into my budget. If this is something that you need in your budget, then you need to account for it too. Remember though, you don’t need to tithe 10 percent. This day and age, it’s enough to give anything.
3. Save for the Kids’ College
If you have kids, then you’ll be able to relate to this. One of the things I make sure to budget for is my children’s college fund. I, like many others, know how expensive college is, and that is why I want to make sure my children have a shot to attend college. Let me rephrase. I want them to have a shot at higher education without taking on an average student debt burden.
In my budget, I have factored in a 529 plan. This helps incentivize myself to sticking to my contribution requirements, and it offers tax benefits which adds value to my budget contributions. Every family is different, so if you choose to budget for your child’s college education, you will need to determine how much you need to contribute. Not everyone is going to have a 529 plan. Some people may even need to factor in financial aid for their savings plan. Needless to say, these considerations go a long way for your short term and long term budget situation.
4. Pay Down as Much Debt as Possible
This one is a bit of an anecdote and piece of advice. One of the lessons I learned very quickly was that debt held me back. I needed to get it paid off as quickly as possible if I wanted to start working on the last three points I made. In fact, it would have been downright impossible if I didn’t crawl out of my debt pit. For example, think about the issue of saving $100 in a month if you owe $250 towards student loans in the same month.
There are plenty of ways to establish a short-ish term plan for tackling debt. For example, when I had credit card debt at high interest rates, I decided to tackle that one first with a timely balance transfer for a lower interest rate. This was a way for tackling my debt in the short term, and it helped me reach my budget goals sooner.
Whether you have credit card debt or other debt, try to focus on making as many payments as possible until it is paid off. If high interest debt lingers, it will cost you more overall, and it will subtract from your savings efforts. Think of it like a ball and chain around your leg on your path to financial freedom. For many people who are making their budget, debt payments are where you need to devote funds as opposed to a savings account or college fund.
Josh Wilson is the owner and author at Family Faith Finances. He is married and he and his wife have three children. Their names all start with J! Josh and his family are focused on living a life of faith and financial freedom. Check out his blog here! You can also follow him on twitter.