I am very excited to be participating in Women’s Money Week 2012. I am breaking from my usual posting schedule to post everyday this week in support of this project. Today’s post is about Budgeting. Click here for more posts on this topic.
There is a part of me today that just wants to cheat and point you to my earlier posts A Budget is NOT the First Thing You Need, A Budget is Not the Second Thing You Need, and Creating a Crash Budget. But I don’t think that really falls in to the spirit of what I am trying to do this week, which is publish new content every day.
So here’s the thing about budgets, at least to me- once you have tracked your spending (so you know where you’re spending your money), and you have figured out your priorities (and how money fits in with those), you can create your budget. But (and this is a big but) that budget is not written in stone. In fact, I’m not certain it’s even written in pencil yet. The first budget you create is almost certainly written in beach sand at low tide. As soon as the tide starts coming back in, it will be washed away.
I know, I know. You went to all that work. You have your budget, and gosh dang it, you are going to stick to it. You know you are. Except that you aren’t. Especially not when you first go on a budget.
Budgets are like science experiments. You should plan them out, do everything in your power to give you the best chance of success from the start. And then you accept that it’s well, an experiment, and trial and error are the ways most of us learn best.
I mentioned late in my post yesterday about the perfect being the enemy of the good. That is just as true in creating a budget as it is in saving. If you wait until everything is perfect, you will never do it. If you instead agree that your budget is not perfect, but you are going to give it a go anyway, then you start.
To go with another cliché, a journey of a million miles starts with a single step.
Just know going in that your budget will change. In the beginning, it will probably change monthly (if not more often), and even as you get better at understanding your expenses, prioritizing your money, and living within your budget, there will be times when you still need to change it.
Your goals will change. Some things will be sped up. Others will be pushed back. Sometimes you will give up on ideas. Other times, opportunities you never even dreamed of will come across your plate. Your budget is not meant to restrict you to only the dreams and goals you had at the time you created it. That would be lame.
I revisit our budget every quarter. That’s right, every three months, I look at how we’re spending, what we’re saving for, and make sure I think it is still in alignment with our goals. If it’s not, I send a note to C. And then we have a conversation about how we can change our budget to meet our new goals.
At the same time, when I do those budget reviews, I look to see if our spending is within budget or not. A one month anomaly can happen, but if we go three months in a row over spending in a category, we need to figure out why. Sometimes we need to cut back, and other times, we need to allocate more money to the category. After all, how far we have to drive to school and work is not going to change, but as the gas prices keep going up, we need to adjust a car budget to reflect that reality.
So that’s the thing about budgets. They are never written in stone. In order for them the work, they have to be flexible; they have to change as you change, and they have to conform to reality. Otherwise, they will never work.