Start With a plan and Include Your Children
By Chad Atkinson
Budgets … we either love them or hate them, and according to recent statistics it looks like there are a lot more of us that hate them. Why?
According to DaveRamsey.com, 68 percent of Americans don’t budget every month, 62 percent have less than $1,000 in savings, and 78 percent of households are living paycheck to paycheck. Do you think there might be some correlation between these?
If the majority of us are not using a budget, then who is teaching our kids how to eventually manage their money properly? Are we really certain that a few hours of glossing over personal finance topics in an economics class is going to prepare them to be financially literate? I don’t think so; it sure didn’t work for me. My family never discussed money. I had to learn the hard way.
I now teach the Foundations Course by Dave Ramsey to the participants of Cherokee Youth Works at our Cherokee FOCUS (Families of Cherokee United in Service) office in Holly Springs. (The mission of the nonprofit is to strengthen families, children and individuals of Cherokee County through collaboration of community resources, skills and expertise.).These youth (ages 16-24) are learning about debt, budgets, savings, purchasing, investing, insurance, etc. We rarely find a youth who has a budget or has been exposed to one. They come to us to help them find jobs/careers, and it only makes sense to teach them how to manage the money that they earn.
If your household does follow a budget, are you including your kids and explaining why things are done a certain way? Get them involved with the process and make it often so they can see the process, the good and the bad. It’s a lot easier to tell them NO when they want something if they are aware of and participate in budgeting. On a side note, if using the word budget makes your skin crawl, then just call it a spending plan like we do. It’s a way to plan where to spend our money.
What steps do you take if you have never done a budget? You don’t need anything fancy or some high-tech program. Just grab a pencil and a pad of paper and follow these steps.
1. Write down all of your expected after tax take-home pay for the month.
2. Now list all of your regular monthly expenses followed by any irregular expenses (quarterly/annual payments) that you might have.
3. Subtract the total expenses from your income, and keep revisiting No. 2 until you end up with $0. This is what Dave Ramsey refers to as a zero-based budget. The important part is to give every dollar a name and tell it where to go. If you get a negative number, you need to work on cutting/reducing something in the budget or earning more money. If you have excess, decide where you are going to spend that money: savings, movies, clothes, debt, etc.
4. Start tracking your spending (all of it). You can do this by hand or using a free app service called Mint. This will allow you to see where your hard-earned money is going and where you could adjust. It’s your spending plan, make it work for you. Tracking your spending will help you be more precise and accurate with No. 2 and gives you back control.
Another thing that helped me was using a printed monthly calendar and tracking the exact day that income came in and expenses went out. It’s amazing the clarity that these small steps will grant you.
That’s really all you need to get started. After a couple of months, you begin to see where your money is going, I guarantee that you will start making smarter financial decisions.
Recently, a couple of Cherokee FOCUS staff members, one of our students, and a representative from South State Bank, which sponsors our class, had lunch with Ramsey at one of his Atlanta radio affiliates. After a great general discussion and a few questions and answers, Ramsey really wanted our student to understand how important it is to get in the habit of budgeting and being intentional with his money, stressing the sooner the better. Starting now would ensure that he would be able to retire when he wanted to and with dignity. Ramsey also told some stories of how freeing it is to get out of and stay out of debt … it would keep him from making desperate decisions down the road.
If you need a budget template to use with your teenagers at home, just email me and I will be glad to send one to you. If you don’t know where to start on your own budget and feel overwhelmed, I would be glad to help you as well, just email or call … I have nothing to sell you.