Budgeting Tips For Beginners

My wife and I started budgeting about 3 years ago, and through both trial and error, we have a halfway decent process. Recently, we were asked to counsel some friends of ours who were trying to manage their finances better. They had the desire but lacked some understanding of how to start. It was hard to think of a few key elements that have helped us progress, but here are a few that worked for us. Budgeting tips, if you will.

1. Keep it simple. Nail the basics before you get complicated (oops, I mean sophisticated). You don’t need to separate food expenses into 10 different categories or get a degree in accounting to start.

2. Keep it fun. In the beginning, we made each other treats and “danced it out” when we made progress. Maybe that’s getting too silly, but it kept us sane! And maybe watch a movie afterward to de-compress and lighten the mood.

3. Don’t overwhelm yourself. It takes time. It took us about 6 months to feel like it was getting easy. When the conversation got heated or exhausted, we wrote down our thoughts and to-do’s in a notebook and used that to start the conversation the next week.

4. Be patient with yourself. And your spouse (if you have one). Remember to build the other person and the relationship during the process.

5. Be a team. Be vulnerable and honest. Someone who is forced to budget against their will always resent it. If you’re trying to convince your spouse, and have messed up it in the past, confess that you’ve done so and want to change. Tell them that your controlling nature or lack of discipline has been part of the problem relationally or financially, and you want to work together.

6. Set some ground rules. One example is that each person can call a time-out if the conversation gets too heated. Another is that each person has to say how they feel. One rule my wonderful wife set is that we only talk about finances during our weekly budgeting times. If we think of something we want to discuss during the week, we put it in our meeting notebook to bring up at the next meeting.

7. Don’t meet monthly. I know folks who try to budget monthly to start and they don’t make much progress. It’s too spaced out. Make it a weekly or bi-weekly discussion so that A.) If you miss a meeting, it won’t be two months between conversations (like it would be if you met monthly) B.) You’ll get more momentum, and C.) There is so much to figure out at the beginning that it takes lots of conversations to cover it.

8. Be creative. We use envelopes for categories with lots of transactions and want to control spending in. We use credit cards for gas (so that my wife doesn’t have to unpack the kids in the middle of winter to play inside). We use a debit card for the buckets. The point is that we created several options and used them where it works.

9. Welcome a little bit of work. When we started, we stopped all electronic payments and went totally with paper bills because we wanted to start paying more attention. I would encourage this, but it’s not crucial. The point is that introducing a little bit of manual work in the process will help you pay attention more. Auto payments and Quicken tracking make it too easy not to pay attention.

10. Celebrate progress. Maybe you haven’t paid off your mortgage, but feel free to celebrate a 3-month milestone or get your short-term emergency fund in place when you’re just starting. It helps to feel like you’re getting somewhere.

Anyway, those are a few of the many things we learned when we started. Do any of these resonate with you? Any that you would add to the list?