6 Tips for a Functional and Successful Household Budget

Budgeting is the one thing everyone needs to do and no one actually wants to do!

For many, budgeting is a term that brings up a lot of shame and disappointment over budgets blown, forgotten, or abandoned once a goal is achieved… or failed. No one doubts the benefits of a healthy and functional budget, but achieving that sweet spot of saving and spending - without feeling restrictive - can be tough! 

Here are some tips to either help you evaluate the budget you’re currently working with or guide you as you get started with household budgeting.

Budgeting Tip #1: Understand that Budgets Are Not “One Size Fits All”

There is no single budget that magically works for every household. 

In order to succeed, your budget must take into account your income, your spending habits, your financial goals, the size of your household, the values your household believes in, your living space….have I made my point yet!? There are way too many factors involved in crafting the perfect budget for every household to follow the same blueprint.

By removing the expectation that your budget looks more or less like anyone else’s, you can make sure to have a system that actually works for you.

Budgeting Tip #2: Don’t Be Afraid to Tweak Your Budget

Finding the ideal budget for you is not a “one and done” effort. 

Sometimes, new events come up in life and you suddenly have new savings needs. Exciting changes can come up in your career and suddenly your household income is a little different. Life happens, and with the changes life brings, your budget should change as well. 

The goal is to find something that fits your household and its needs. And neither of those will remain stagnant.

Budgeting Tip #3: Keep an Eye on Your Exact Spending

Closely tracking your spending can help you see where budget adjustments need to be made. If you are spending way less on eating out, due to pandemic restrictions, maybe you can start putting that little bit of extra money into a savings account for a short-term financial goal that you’re trying to reach.

By keeping a close eye on your spending, you can also keep track of your variable expenses and catch any irregularities quickly. A major aspect of making a budget work is having a close eye on how much money is coming in and out of your household, overall. 

If you can account for everything coming in and where it ends up, you can continue to make responsible decisions for your household budget.

Budgeting Tip #4: Set Some Financial Goals

No matter how trivial or extravagant they may seem, budgets work when there are real wants and needs behind them.

Financial goals can be long-term or short-term, which often means big or small. An example of a long-term goal may be paying off a loan, while a short-term goal might be something smaller like saving up for a new TV in your family room.

There’s no right or wrong way to set financial goals, but by having a few milestones along the way, you can more easily see the positive effects of the often difficult task of sticking to a budget.

Budgeting Tip #5: Account for the Lifestyle You WANT to Have

A lot of budgeting advice depends heavily on restricting your day-to-day spending in favor of saving every last penny outside of your basic needs. For many, that is simply not realistic. 

When you budget, take into consideration the spending that harms versus the spending that helps. Late-night Target shopping sprees can hurt your overall financial stability, but picking up coffee outside the home once or twice a week could bring you a little bit of joy without breaking the bank.

It’s important to evaluate what lifestyle you want to live, and budget in a way that makes sense with those habits in mind.

Budgeting Tip #6: Live Within Your Means

Remember that budgeting is not about making sure every penny you earn is spent. 

Rather than starting with the amount you see coming in each month, start with your household needs. Add up your fixed and variable essential spending, first. Once you account for those costs, move on to non-essential reoccurring costs. From there, you can evaluate your remaining household income and allocate specific amounts or percentages as you’d like.

By budgeting in this order, you make sure that your spending, whether essential or not as important, is not in excess. If there is little or no remaining income to divide, it may be time to reevaluate your spending habits and determine where to cut back.

Budgeting is more of an ongoing process than a task you can complete in one sit-down with those contributing income to your household. 

Whether you use a spreadsheet, a journal, an app, or any other system, these tips can help you get and stay on track with your budget to reach the financial future you want to have! 

And remember: Gretchen Rehm Financial is here to help you work towards a functional and financially thriving household budget.