We talk about money and budgeting a lot in our house.  It’s common place around here, but it’s not something that I’ve always been used to.  We didn’t talk a lot about money specifically growing up.  It was a private thing.  My parents were very good at teaching us basic money principles – not spending more than you make and being generous.  Still, it wasn’t until I was in college that I really sat down to make a budget.

My first budget was very simple.  I had two bank accounts at the time – one for savings and one for checking.  I also had two part-time jobs – one on campus and one back home that I kept from high school where I worked seasonally.  This first budget was fueled largely by my need to not overspend while on campus.  My largest expenses at the time were buying textbooks and spending time with friends.  It was a super simple spreadsheet, but it really helped me understand the importance of having a budget.  Not only did I not want to overspend, but I wanted to saving to pay off student loans.

Things are a little different now that I’m making decisions with Hubs for our family rather than for myself.  The basic principles, however are the same.  Today I’m sharing the top 5 reasons that we are adamant about creating a budget for our family.  My hope is that if you do not already have a budget, you will consider creating one.  If you do already have a budget, I hope this will motivate you to continue to maintain it well.

5 Reasons Creating a Budget is Important

Creating a budget allows us to be good stewards of our resources

Creating a budget is one of the first steps toward good financial management.  A quick internet search will reveal countless articles on creating a budget, but one one of my favorites is an old article from Forbes Magazine – Who Needs a Budget?  For our family, it is important to us to be good stewards with all of the resources that we’ve been given – we want to use our money wisely.  I’ve heard it said before that your budget reveals your priorities.  That is, if you want to see what someone values, take a look at their bank statement (or credit card transaction history).  Having a budget lets us determine our priorities and allocate our resources accordingly.  We can predetermine how much of our income we want to spend on any given thing and then move forward accordingly.  It also allows us to identify areas where we need to cut back, or increase allocation based on what we deem as the top priorities for our family.

Creating a budget helps us set realistic goals and have a plan for meeting them

Early in our marriage, we began to set goals together.  Whether it was to buy our first home, pay off student debt, purchase a new (to us) car, travel, etc.  We began to list out the things that we were hoping to accomplish and what steps we would need to take to do them.  One thing that we decided was really important to our family was to be sure that we had a plan in the event that one of us suddenly lost our jobs and/or we decided to have one of us stay home when we had children.  (Both of those things have happened – although in different years.)

Having a budget allows us to realistically see how much money we are able to set aside each month to save toward each of our goals.  This lets us more realistically plan for when we might be able to accomplish our goals and how long to expect to save for them.  Having a realistic time frame for your goals will allow you to see your progress over time and not get as easily discouraged if the process is slow.

Creating a budget holds us accountable

Having a budget keeps us accountable for all of our spending and saving decisions.  We track every dollar and assign all of our purchases to a category (groceries, mortgage, personal, home, etc.)  In this way, there are no secrets when it comes to our spending habits.  We can easily look at our budget at any point to see how we are doing in any given category.  This forces us to acknowledge every financial decision that we make and take responsibility for it.

Creating a budget helps us make quick decisions

I cannot emphasize this one enough.  Having a budget makes the “Can we afford this?” conversation so much easier.  Our budget has already given us a realistic expectation of the things we can and cannot afford and the motivation towards accomplishing our pre-established goals.  What this means in our day to day life is that I never feel guilty about enjoying a latte on the spur of the moment because I know much money I’ve allotted toward those sorts of personal expenses and how much I’ve already spent in a given month.  Likewise, we can spend less time thinking about purchases that we cannot afford at a given time.  When we know that something is not in the budget the answer to the “Should I buy this?” question is already answered.

Creating a budget helps protect our marriage & to foster a healthy relationship with money for our children

Finally, we budget to protect our marriage and to foster a healthy relationship with money for our children.  This one is HUGE to me.  Financial arguments are one of the top reasons for disagreements and fights between couples and we want to do everything that we can to avoid that.  Hubs and I are two different people with different habits and preferences.  Having a budget that we created together and frequently talking about our goals helps keep us on the same page when it comes to our finances.

We hope to model this sort of team-player attitude toward budgeting for our children as well.  Our willingness to discuss our goals together and make changes as needed fosters a healthy relationship with money.  When we’re working on the same team with our budget, we celebrate our successes and cut back together when we need to.  Hubs and I both have input, which is critical to having a budget that works and preventing arguments in our home.

Now it’s your turn.  Do you have a budget?  What made you decide to create a budget?  What has been your experience using the budget?  Leave me a note in the comments and tell me!  I love to hear what’s working for others!