If I’ve said it once, I’ve said it a hundred times: a budget is your greatest weapon against debt.
Wait. Check that: A well-built budget is your greatest weapon against debt.
Want to make a budget that works? Even the nicest-looking budget, if not customized to your family, will result in dismal failure if you fail to do one simple thing.
I’ve been creating relatively successful family budgets for nearly 15 years and STILL failed to implement this idea fully. Doing this one little task has given us a more accurate view of our finances.
What is this simple task?
Sounds like a no-brainer, right? You’re probably thinking, “of course, you dumb-dumb!” as you prepare to click back to Pinterest, or Google, or wherever you’ve blown in from. But wait!!!
Are you really budgeting every expected expense?
How about your yearly Amazon Prime subscription? (We’d forgotten that one!)
Your annual credit card renewal fee? (yup, forgot that one too)
Biannual septic pumping for us country folk? (Sigh. Slap to the forehead)
The newspaper subscription?
I bet there are even more recurring expenses that you haven’t thought of. I know there are a lot of sneaky bills that come through my own family’s credit card statement that I hadn’t considered. You know who helped me to realize that I was totally missing a bunch of recurring items in my budget? My friend Allison.
No, this realization didn’t come over a great cup of espresso at my favorite coffee shop (Starbucks– free gift cards gladly accepted *wink*). Instead she shared it with me (and thousands of others) through The Beginner’s Guide to Budgeting.
I know, so nice of her, right?
Along with providing an excellent primer on budgeting methods, Allison showed how important it is to get every. single. bill. into your budget. I thought I’d done that… until I sat down and really took a look at our line-by-line budget items. Now we’re putting those stray odds-and-ends back into the budget and getting a more accurate look at our financial picture.
How do I find stray budget items?
Simple! Scan your last year’s account statements for recurring bills that you’ve forgotten to include in your budget.
Sound like a real pain?
My thoughts exactly.
Here’s the lazy man’s way to find stray budget items:
wrack your brain (along with those of your spouse and children) for a good 20 minutes, considering all possible recurring bills that come into your house. Then, comb through the last 3 months of account statements for anything you’ve missed. As new charges come in, add missed bills to the budget.
Why does this even matter, Janeen? An unaccounted Netflix bill won’t cause a bankruptcy!
No, it probably won’t cause you to go bankrupt, but it will lead to an inaccurate budget. This, in turn, will keep you from accomplishing your financial goals.
Bob and Sue Smith: a Fictitious Example
Let’s say that Bob and Sue have carefully budgeted every dollar. Upon enthusiastically creating their budget they see that they’ll have an extra $100 of income that can be put towards savings each month.
Unfortunately, Bob forgot about their annual newspaper subscription that costs $120 per year. That’s $12 each month missed from the budget.
Sue remembered that she owes Netflix $99 each year ($8/month), plus $80 for her reward credit card ($7/month).
Throw in their septic pumping fee ($300 every other year), homeowner’s dues ($230/yr), and coffee-of-the-month club ($20/month) and they’re dangerously close to going over budget without even realizing the danger.
If Bob and Sue forgot to budget for those bills, their savings would have slowly been drained away.
Come on lady, can’t I just get my budget “in the ballpark”?!
Think that you’re getting an accurate financial picture without including these little buggers? Think again. All it takes is one sneaky, unaccounted bill to ruin an otherwise perfect month.
You might do an amazing job sticking to your budget, but then find that it’s all blown to bits when one of these sneaky ninjas jumps into the picture. If we’re careful to account for all odds-and-ends before embarking on our journey, the budget is adjusted to accurately reflect the overall financial picture.
Now you can spend freely while confident in your budget.
How we’re reaching our goals with an accurate Budget
I’m super jazzed about the fact that we’re sooooo close to paying off our mortgage. By December 31, 2018, that debt will be gone, baby.
As in: no home loan, the house is ours, “Get off my property Mr. Fargo!!!”
That kind of debt payoff doesn’t come without carefully considering our budget and striving to make it the most accurate it can be. Think of it like this:
If a family’s hopes and dreams guide their resolve, their budget provides the “boots on the ground” to accomplish the task.
We’re seeing how a careful and accurate budget gets us to our goals quickly. That, in turn, creates an eagerness to further nurture and sharpen our “greatest weapon against debt”.
If you want to make a budget that works, you have to start by taking all of your expenses into account. Even the oddballs.
What’s your best advice for budgeting more accurately? Have you forgotten to include some of these odds-and-ends in your budget?