Happy 2017! The new year means that people are thinking about ways to change and fix all the things about their lives that need changing and fixing. Faithful Catholics might think about improving their spiritual lives – resolving to start praying more, going to confession more, yelling less, being more grateful, etc. In the midst of that crucial spiritual stock-taking, I want to propose a more “practical” item that deserves consideration – finances. Specifically, I want to address creating a budget.
Money issues are a practical matter, but they have spiritual implications as well. For example, one of the major causes for marital strife and even divorce is financial difficulty or disagreement. Having a workable family budget goes a long way toward creating personal and familial harmony. Without a budget, there is much more room for stress and conflict. More broadly, money is a tool to be used in the service of our calling as spouses, parents, and missionary disciples. We must be good stewards of it in order to carry out that calling. Budgeting is part of that stewardship.
I’m not in any way a financial professional or expert. Rather, I’m a wife and mom who takes care of the family finances, and has finally found a budgeting system that I can stick to (after eight years of marriage and many failed attempts). I’m someone who has witnessed the dire consequences in people’s lives of not being good stewards of their money. As such, I believe in the importance of budgeting, and want to share some tips for those who do not have a budget. (There are many resources out there for further information on the topic of budgeting and being a good financial steward).
- Recognize your need for a budget. Even if you are in the top tax bracket, you need a budget. Budgeting isn’t just for those who must watch every penny simply in order to feed their families. On the flip side, even if you think your budget would never be “in the black,” you still need one. You might think that your necessary spending outweighs your income (and thus rely heavily on credit), but creating a budget and tracking your spending will help you see where you might be able to cut back so that your budget can balance.
- Find a budgeting tool that works for you. Even if you use pen-and-paper or an Excel spreadsheet, it’s critical that your craft your budget in a way that makes the most sense to you and is easily implemented in your life. I use a website called EveryDollar (created by financial guru Dave Ramsey). Until I discovered this website, I had never been able to create a budget that accounted for all my expenses (not just the monthly, predictable ones), let alone one that I was able to stay on top of. There are other websites and apps out there. Look around to see what will work for you. Take advantage of free trial offers for paid programs (as long as you can trust yourself to cancel before the trial is over if you decide you don’t want to use it!)
- Work with your spouse to create the budget, and make a mutual commitment to stick to it. You both need to be on board with the budget in order for it to work! If either of you are reckless spenders, the budget will be sabotaged. (If you or your spouse are unable to get your unnecessary spending under control, considering talking to your priest or a counselor). Communicate and re-evaluate the budget often.
- Use a “zero balance” budget. This is a type of budget where you account for every penny that comes in. If you bring in more than you spend each month on necessities and “extras,” consciously allot the rest to savings or to paying down a debt. By using this kind of budget, my husband and I were able to pay off our student loans more quickly. You should go back and adjust the budget at the end of the month to make sure it zeroes out. If you over-budget in a category like groceries or gas, you can put that extra money toward a category you may have under-budgeted for, or toward debt and savings. Adjust the next month’s budget to reflect your actual spending habits.
- Budget for the bills that you pay on a non-monthly basis, and other irregular expenses. For example, our water bill is paid quarterly. Each month, I set aside one-third of what I expect the bill to be, so that the money is all there when needed. I also have funds set up in my budget for things such as clothing, homeschooling materials, and home maintenance. I put some money into each of those funds every month so that it’s there when I need it.
- Track everything that you spend. This is where the website/app I use has made all the difference. I am not “on top of things” enough to record every purchase I make or keep every receipt. For a fee, my budgeting tool imports all my bank activity. I can simply drag and drop each item into the appropriate budget category. Since I rarely use cash to make purchases, this has made it extremely easy to keep track of every expense.
- Be realistic. For example, if you think you “should” be spending only $500 on groceries every month, but you can’t seem to come in under $600 no matter how hard you try, then budget for $600 and cut back somewhere else. Part of being realistic is budgeting “fun money” for you and your spouse to be spent however you want (barring anything immoral of course). This helps cut down on the frustration of adhering to a strict budget. If you create an overly-idealistic budget that you can’t adhere to, you are likely to give up on budgeting.
- Set specific financial goals and use your budget to work toward them. One of these goals should be an emergency fund for those unforeseen large expenses (which tend to pop up in clusters). Other goals might include saving for a house or a new vehicle. (It’s best to pay cash for a vehicle rather than incurring debt. But, if you have to take out a loan, you still need to have a down payment saved up). You should think about long-term goals, such as retirement and college funds, as well.
- Make charitable giving (especially to your parish) a non-negotiable. The Church does not require us to give a specific percentage of our income. But we are required to help provide for our parishes. Do not give from your surplus. Instead, give sacrificially, like the Scriptural widow who gave her last coin.
Successful budgeting usually involves a lot of trial and error. Like all efforts at self-improvement, it’s probably not going to come easily at first. Don’t give up. Financial stewardship -of which budgeting is a critical aspect- is part of a life of discipleship.