Wednesday, August 29, 2012
Gena Bigler: Why wait for the new year, fall
is the best time to work on the family budget
I’ve never understood New Year’s resolutions. Trying to start something new or make a big change in the middle of the dark gray winter doesn’t work for me, or most others I know. For me, fall is the start of something new. Back to school sales set off some inner need for a fresh start. As a child I loved buying new school supplies. Not much made me happier than a fresh blank notebook and needle sharp pencil.
It’s been many years since I needed to buy a notebook for the start of school but fall still feels like a beginning for me. It’s a great time to review the past year and think about how to improve your life. I make my resolutions as school starts. Now that I have children, fall as time for planning makes more sense.
The crunchy grass of late summer, when the nights are cool and crisp seems the perfect time to reflect and plan. It is also an excellent time to think about money. For most families expenses start to pile up in the fall. Back to school clothes and supplies, and then just around the bend are Halloween candy and costumes followed by Thanksgiving decorations, cards and food for the traditional feast. During all of these costly events, Christmas and holiday shopping are looming.
If you don’t have a budget, fall is a perfect time to start using one. With the lazy days of summer behind you, planning ahead isn’t so daunting. So break out that crisp fresh notebook and perfectly sharpened pencil and get to work.
The first step in a good budget is to record expenses. Write down everything you spend. That breakfast burrito you pick up after dropping the kids off? Write it down in the notebook. The lunch you had to buy because you forgot the one you made on the kitchen counter, it goes in the notebook too. Record everything. No skimping here, it will matter later.
The next step is to review. Read everything you wrote down carefully. Sort everything into categories. Be realistic in your categorization. If breakfast burritos are a necessity for you, then don’t put it in a low priority category. You can sort these any way you like, but you should have expenses prioritized. A “must pay” column would include things like rent/mortgage, utilities, food etc… Another category would be “like to keep,” another for “upcoming expenses” and finally one labeled “like but can live without.”
Now you need to be ruthless. How important was that burrito? If it was worth the $5 to you, leave it in; if not, cut it for the future. Future expenses can be the hardest to judge. Look at what you spent in the past and be realistic. If you usually spend $50 per person on holiday gifts then plan to spend that. Writing down dramatically less may make you feel responsible for the moment but if it’s not accurate then you are setting yourself up for failure. If it is important to you, you will buy it so you need to account for it in your budget. If you don’t, the budget is worthless.
The future expenses’ category can be a fun and motivating tool. Some expenses are essentially written in stone, such as housing. Some are more flexible. You may spend $50 on gifts during the holiday season or you can be creative and make less expensive gifts or shop throughout the year and manage to spend less. If you spend less, then you have bonus money that you can allocate to something else, maybe something fun, maybe something comforting like increasing your savings for the future. Budgeting can be fun and rewarding. Knowledge is power and knowing where your money goes is the first step to keeping it.
Gena Bigler is passionate about public service and credits her time serving nonprofits in AmeriCorps and Volunteers in Service to America (V.I.S.T.A.) with teaching her extreme budgeting and bargain shopping. Gena is now CFO of a Kentucky business and serves on the board of the Kentucky RiverKeeper. Gena would be happy to hear from you at firstname.lastname@example.org.