Secrets of Managing Personal Finances

We are all looking for that one-size-fits-all solution to our budgeting woes—like checking the boxes and magically watching the budget balance itself. That’s not ever going to happen. Budgets are as personal as each of us. And your unique family situation, needs, income, and location make it impossible to create a tool that will balance your budget for you.

So here’s the secret: You have to create your budget yourself. You have to watch it weekly, and you may have to change a few of your spending habits.

No one said it would be easy. But the peace of mind is worth it.

So the first question is “Can you change?”

Let’s look at the tips for changing behavior before we lay down the laws of budgeting.

Now about that budget. There are two columns—income and expense. Income is easy—it’s everything you make per paycheck (or per month if you choose to do it that way). The expense column is divided into two sections—needs and wants. Write your needs first and the amount of money required to meet them. Include your savings in the section on needs. Save the same percentage of your income each month—5 or 10 percent or whatever you decide—just make sure you are saving. Most people organize their needs by date so that it’s easy to look at the budget and say, “What’s due today?” Examples of needs are mortgage, utilities, transportation, and insurance.

Wants get a bit trickier. We need groceries, but we don’t need a bag of donuts and that 12-pack of soda pop. And there are plenty of tips for saving on groceries, such as using coupons and buying in bulk. So don’t let the grocery budget grow out of control!

Take heart. Everybody has more wants than they can afford. So at some point, your wants list is going to run out of money. Identify a couple of things you want to save for. Pay cash. Avoid debt. And know this: no material thing will ever bring you true happiness. People who are happy, whether they’re from the poorest communities or the richest, will tell you the same thing: it’s not what you own, it’s what you do that makes you happy. It’s experiences that bring families close together, not things. So on your wants list, write down things that will make you and your family happy—afternoons in the park, playing games together, or sightseeing. And for every material item on your list, ask yourself—will this make us happier as a family?