Home > Introduction to Budgeting

Introduction to Budgeting

March 4th, 2020 at 01:07 pm

Last night DS1 finally made the time to come over to create a budget. I have been nagging him so his participation was somewhat reluctant. I asked him to bring his laptop and I started him with an Excel workbook that I created with sample categories populated. I preached my truth about budgets not being restrictive but instead giving control so the funds are allocated to the things we believe to be most important in our lives.

I am cautiously optimistic that the session was effective! He adjusted the categories and evaluated different scenarios just like I do sometimes. The spreadsheet is basic but it calculates totals by month, by category, and year-to-date. He got excited about having a vacation fund and an entertainment category. Once he had the budget balanced to nearly align with his minimum pay, he downgraded his Netflix membership, downgraded his health club membership, and deleted a Doordash app from his phone. I didn’t suggest any of those things!

He created a category for health insurance premiums so he doesn’t forget but the budgeted amount is zero for this year since he can remain on our health insurance plan through December. We also talked about removing comprehensive auto insurance coverage to lower his premiums once he gets his financed 2007 vehicle paid off which he said will happen by summer.

We’ve planned another session on Easter day when he’ll be home to open an HSA account with Fidelity and a Roth IRA account with Vanguard. He’s got budgeted amounts ready to auto-transfer once he gets those accounts established. Before then he’s going to open a savings account at a different bank than his checking for his soon-to-be EF.

My justification for being so assertive in getting him to sit down and work a budget was that I wanted to make sure he paid back his loans to me. That’s what I told him to make him feel obligated to meet. And that is indeed a category in his budget. But my motive was broader – I wanted him to be empowered, to feel like he controlled his finances. I’m hopeful. He did seem to own it by the time we finished. We’ll see how it goes. I think I’ll e-mail some links to blogs with budgets every few days so he can compare his with others. I know I always find that an interesting exercise.

3 Responses to “Introduction to Budgeting”

  1. creditcardfree Says:

    Fantastic! I should definitely do something similar with my daughter when she is home from spring break. Only problem is she only has an internship right now, and is just starting to look for a full time job, so the income amount isn't known. However, estimating a budget can still help one know how much they should be looking for in income.

    You are a very good teacher and mom!

  2. LifeBalance Says:

    Thank you for the compliment, CCF! I think it would be a worthwhile exercise with your daughter in advance of the job search. She could make a conservative budget for an entry-level position compensation. Then she'd know whether an offer was good enough to meet her financial goals.

  3. rob62521 Says:

    That's terrific! I think the way your approached it as not a restriction, but a way to plan was great and he apparently must have agreed since he wanted to make some changes.

    Years ago my husband couldn't understand when I wanted him to slow down on spending. I paid all the bills because he didn't want to bother. He would go and get cash from the checking account and when it was gone, go get more. I finally made him sit down with me for a month as we paid all the bills together and he saw how many times his spending was keeping us from having savings. He did start to cut back. He liked seeing money in the bank and then money in savings and eventually investments. I'm rooting for you!

Leave a Reply

(Note: If you were logged in, we could automatically fill in these fields for you.)
Will not be published.

* Please spell out the number 4.  [ Why? ]

vB Code: You can use these tags: [b] [i] [u] [url] [email]