Personal Finances – Phase 5: Sticking to Your Budget

In my last article, we discussed the steps and things to consider when creating a balanced budget. I challenged you to create a budget, it you haven’t already done so. In this article, we will discuss how to overcome difficulties which will inevitably come so that you can follow through on the commitments you made when you created your budget.

Learn How to Recognize and Solve Problems

There is a man, and his wife with four little kids. They are doing alright, but bills are a little tight at the end of the month. “Maybe I will get a job” she says. The following day, she goes and finds a job as a receptionist. She works there for the next few months, and find that money is tighter. What is going on?

They sit down and look at their expenses. Spending on gas has gone up with two cars commuting now. Spending on food gone up, she is tired at the end of the day, so eating processed food becomes more common. Resturanuts have become more common to eat lunch. Instead of packing food for him from, he will grab food at the quicke mart. The two youngest have to be put into daycare…..the list goes on. “Well, maybe I can start putting in overtime”……..

Solving life’s problems is one thing we all have to learn and do. But all to often, we are trying to fix the wrong problem. In the scenerio, she could have gone home, and refocused on eliminating some frivolous expenses, or maybe increasing income some other way.

Instead of doubling down on some erroneous solution, often it pays to step back and re-evaluate. This may take one or both swallowing their pride.

I know I told this story before, but when I was around 20, I was living in Alaska. I was working at this trailer park, shoveling dirt. I tried my best to find a decent girl, but was having terrible luck. At this time, I was getting fairly depressed about my situation. I was realizing that if I continued my course in life, I would become a loser, with a loser for a wife, surrounded by little losers. That day, I called up my parents and announced I decided to go to school. At this point, I didn’t know what I was going to do, but I started looking at various mechanical technician schools. I moved back to my parents house to save up money. Eventually, I worked into the Civil Engineering field. During my Sophomore year, I took the next step and joined the Mormon Church, partly for religious reasons, but also to surround myself with quality women. Eventually I married, then graduated in the field. Had I just forged ahead, doing what I was doing, I would probably be in a similar situation as my brothers.

Following Through on a Budget

If you followed through on the previous personal finance article, you will have a decent budget written out, tailor made to your needs. However, in order to make it of any value, you need to stick to it, which is sometimes easier said than done. Unexpected bills arise, your long lost cousin may drop by and go play for the weekend, or infighting on being too stringent in some areas may cause you to fall off the wagon and have to pick yourself back up. Don’t give up.

 If you find you are continuing to fall short in some areas, you may need to readjust from time to time. There is nothing wrong with readjusting your budget at times. The family is an organic entity, continually changing needs, income, and expenses. There may be months where expenses overrun income (planned vacations or medical emergencies, for instance). The trick is to plan ahead for these contingencies, so a medical bill does not become a financial emergency. If you make $1000, and spend $1100 on average, you will be stressed financially and be headed for financial ruin when the credit runs out. If you make $800 and spend $750 on average, you will have reduced your stress, and built up savings for these emergencies.

Set Realistic Yet Motivational Financial Goals

  1. Russel Ballard once taught, “Let me tell you something about goal setting. I am thoroughly convinced that if we don’t set goals in our life and learn how to master the technique of living to reach our goals, we can reach a ripe old age and look back on our life only to see that we reached but a small part of our full potential. When one learns to master the principle of setting a goal, he will then be able to make a great difference in the results he attains in this life” (“Do things that Make a Difference”, June 1983)

In the coming articles in this series, I will discuss many financial goals and priorities. Answer the following questions (yes or no).

  1. Do I give reasonably to charity?
  2. Do I have a one-month emergency fund? (One month of income in savings)
  3. Do I have health insurance or access to medical care?
  4. Am I free of consumer debt such as credit cards?
  5. Do I have a three to six month emergency fund?
  6. Am I contributing to a retirement savings fund?
  7. Am I working to eliminate mortgage and education loans?

The first question you answered “no” to should be the financial goal you focus on. There will be other more pressing short term goals you may be working on, such as saving for a car because your current is going kaput, but these goals are the long term goals to focus on. In the coming articles, these will be explained in further detail.

Decide on a Budgeting System

There are two major types of budgeting systems.

  1. The paper envelope system
  2. Digital systems

The paper envelope system is supported by Dave Ramsey. Take the money you make and split it up into a series of envelopes, with a specified amount of money in each envelope. When your clothes shopping envelope is empty, you are done spending for the month. This system has advantages and disadvantages, namely the paper envelope system is harder to cheat with. IMO, it would be better in households where there is a larger discrepancy between spending habits. However, a huge drawback is the safety issue. Carrying around hundreds of dollars of cash may set you up to be robbed. That, and the envelope system is more time consuming.

There are many digital systems out there. A quick Google search will bring up a number of online systems, or software solutions. My wife and I use a simple excel spreadsheet. While it took time to develop, it had the freedom to customize to our needs. We actually do a hybrid of we each do the “envelope” for a certain amount of personal spending cash, and the rest is budgeted electronically.

Council with the Lord

Some decisions in life are tough. There have been times that I prayed to ask certain questions. Rarely have I felt like I got a solid answer to questions. Call it intuition or whatever, but the Holy Ghost will rarely give a complex answer or verbalize anything. More often than not, it will come as a positive, neutral, or negative feeling.

In order to better communicate through prayer, first come up with a plan. Using the plan, formulate a question to go to the Lord in prayer. If the Lord concurs with your idea, you should have the Holy Ghost confirm this to you. “But the fruit of the spirit is love, joy, peace, longsuffering, gentleness, goodness, faith, meekness, temperance: against such there is no law.” – (Galatians 5:22-23). If your idea is dumb, you should have no such feeling, and you will forget whatever you were asking.

Hold Yourself Accountable

Frequently reviewing your budget and comparing it to your spending is vital to hold yourself accountable to your budget. Use the weekly family council to report your spending to your family. If that is unfruitful or not applicable to your situation, you may consider reporting to someone else on occasion such as a friend, colleague, mentor, or financial advisor. A daily goal setting journal may also serve to keep yourself on track.

Since this class, my wife has been creating a daily list of goals. She checks off the goals as she completes them. So far, I have noticed an improvement in the condition of the house, jobs getting done, and food on the table when I get home. While I haven’t been so diligent myself, I have seen an improvement with her.

The Challenge

This week, I want you to have a family council, and with this article, discuss:

  1. Are there any changes you need to make with your budget?
  2. What is your current financial priority?
  3. What long term goals/priorities should you be focusing towards?
  4. What budgeting system will you use (envelope or electronic)?
  5. What will you do if you go over budget?

If you haven’t noticed, I have emphasized family councils quite a bit. Getting everyone on board not only will help you achieve your financial goals, it will help bring your family together as you work on common interests.

Author: Jim Johnson

As a man in his early 40's, I grew up on a dairy farm in an irreligious home. Disgusted with the choice of women out there, I looked into religion to find a worthwhile mate. At 23, I joined the LDS (Mormon) faith, married, became a civil engineer, and now have six children. My favorite things are puppies, long walks on the beach, and the color blue (not really).