Although it is not easy, your military training prompts you to overcome obstacles that come in your way. This should include your family’s financial needs.
This is a task that you need to undertake with your husband or wife – not just because it makes it easier. Creating a working budget together will make it more effective and efficient in addressing the financial needs of the family. Of course, this is also a great way to make your relationship stronger.
How to create a working budget
Here are a few things you can consider when you finally decide to sit down and focus on your household budget.
1. Examine your past.
Start by looking at your past financial activities. Creating a list of how you used your money in the past can give you a better understanding of your current situation.
2. Make a list of all your income sources.
It might seem unnecessary especially when the family relies mainly on your salary. However, there are and can be other sources of income. Take note of your investments and other benefits that you can avail as a military family.
3. Write down all your deposits over the past 12 months.
This will determine any disposable income that is left after your expenses.
4. Write the monthly payment next to each expense category.
You need to have a definite dollar amount for each category and not just a ballpark figure. This will make creating a working budget easier. When you create your list of expenses, rank it according to priority.
5. Develop a budget based on these figures.
Now that you have everything you need, you can start making a budget for your family. Ensure that you are able to cover all expenses with your income and that you are able to save money as well. In case your expenses exceed your income, get rid of the expenses that you can live without.
6. Make this activity a habit.
One way for budgeting to be effective is to make it a regular financial activity. It is a must to revisit your budget to ensure that it is still aligned with your current financial situation and any new goals that you may have.
Mistakes to avoid when creating your budget
Creating your budget will not be an easy activity to accomplish and it would help if you knew the common pitfalls military families experience when budgeting. Here are some of them.
1. You list down items in separate mediums.
Keep things simple and use only one medium. It will help tracking and monitoring easier to accomplish.
2. You never take out your budget when you need it.
A working budget is only effective if you follow it. You may have created a perfect budget plan but if you do not use it, then it will be for nothing.
3. You believe the figures are just suggestions.
Treat your budget as strict guideline – not just a suggestion. This will make you view it more seriously and hopefully, will discipline you to follow it.
4. You easily give into temptations (e.g. sale).
If you know that you will easily give in to temptations, then do not expose yourself to one. In case you have to go to a sale event, create a list and stick to it.
5. You blindly lend money to family and friends.
It is right to support our loved ones. But you should follow a different rule when it comes to your finances. Make sure you help them deal with the reason why they are in financial trouble in the first place. If it is reckless spending or living beyond their means, do not be quick to lend them money. You are only supporting their bad financial habits.
6. You forget about your long-term goals.
A financial goal is the best way to give your finances some direction. It helps guide your every decision. Make sure you consider this and incorporate it in your budget.