My husband and I first created our household budget to get us through the ‘rough times’ – the young, newlywed, whirlwind years when we were struggling to make ends meet. We took those same budgeting skills and used them to build a pretty comfortable life for ourselves. Creating and adhering to a budget is not easy, but it is totally worth every effort and sacrifice to meet your financial goals. Here’s our approach to creating a household budget, what it’s has done for us, and the reasons I encourage everyone to have one.
We Plan For the Future
The rippling waves of your financial decisions will be felt for years, if not decades. They’ll either hoist you out of your financial predicament or thrust you further into the bottomless pit that is financial insecurity. It is for this reason that I plan our budget 5 years in advance; it animates the monetary impacts of major life events, and as you get older, the antes are raised and greater sums of money you’ll need.
Additionally, my husband and I are both fully aware of our financial situation, agree on our financial goals, and determine the steps to meet said goals. We have transformed managing our finances from a daunting task to a reassuring exercise.
We Got Out of Debt
We have paid off more than $50,000 worth of debt throughout our union. A good portion of that was paid when we were making half of what we earn now. We paid off $20,000 in approximately 8 months after we got married and, a few years ago, we paid off $30,000 in six months. This was all possible by having a clear budget with strict milestones and aggressive cost-cutting measures. It was not easy or comfortable, but it was totally worth it!
Getting out of debt led to saving…a lot. I have lived through decades of financial insecurity, and it’s not something I want to experience again. I appreciate the freedom afforded by having large sums of cash in the bank. Being financially liquid is vital in today’s unstable times, and I like having the peace of mind that I can weather any storm. I suggest you save outside of any investments, especially if those investments rely heavily on an unstable market.
Forced Me Outside My Comfort Zone
There are few events more sobering than seeing your finances projected and finding out you don’t make enough to live the life you want AND land on a comfortable retirement. This realization forced to me get out of my comfort zone and enter a field I swore I would never touch: the tech industry. For project managers, this field offers higher salaries and better overall benefits, but I avoided it like the plague! Something about it just scared me, but my financial reality forced me to take a leap of faith. The move has paid off both financially and professionally because I am now on a solid financial track, and I found out I enjoy the work.
I Now Plan for Major Projects and Life Events
Each year we earmark a portion of our budget for major events or projects. After we purchased our condo, a fixer upper, we knew we were in for many years of hard work and siphoning money from our accounts into the pockets of our contractors. Having a clear understanding of our 5-year budget granted me the ability to assess each year’s available funds, schedule projects based on each year’s ease, and execute the project with peace of mind. Additionally, actively managing and forecasting our budget allows me to see the impact a major purchase has on our ability to meet the goals we set for ourselves.
I Get to Prioritize Travel
Along with earmarking money for major projects, I also get to allocate money for our yearly summer/winter trips. I like to plan memorable trips to international locations that we’ll reminisce about for years to come. Due to the cost and heavy logistics, I have trips planned out years in advance. Having a 5-year budget allows me to decipher the years in which a particularly pricy trip is possible.
We Don’t Judge Each Other’s Purchases
I have a penchant for designer brands and my husband has an affinity for musical instruments, and both are equally expensive. In the past, when we wanted to buy something personal, we had to ask for each other’s permission. It was awkward! So…you guessed it, I earmark money for our personal purchases. We each get a certain amount a year for us to use as we please- a true judgement free zone. I can buy the same purse many times over and he doesn’t get a say…not one peep!
Having a personal budget has changed our lives because it’s placed us back in the driver’s seat. Our financial future is no longer shrouded in mystery and an ominous concept too complicated to understand. We get it, we’re confident, we’re ready