Time For A New Budget

It is coming up to the end of the financial year and time to do up a new budget.

Budgets always need adjusting, they change as family needs or incomes change. As your budget evolves you may notice that you have more than enough income in one category, but are always running out of funds in another category. As seasons change you may have different expenses. In our household winter sports and less water skiing means that one category goes up while another comes down.

I never view a budget as a negative thing. I think it is one of the most powerful tools that a family can use in order to bring peace to a household. Involving your children in the family budget is also a great way to teach them how to save and use their money. My boys have learnt the value of money, for example, if they are putting $15 a week in a particular category then they know how long it takes to save $90. If we want to do something on a weekend they look in the ‘entertainment’ envelope and can make decisions about whether we can order a pizza or go bowling and eat out. There is very little nagging or squabbling because they understand the process.

As my regular readers know, I work with a cash budget because this system works really well for me. I have read about people who budget using a credit card and virtual envelopes and that works extremely well for them. The secret is finding a system that ‘honestly’ works for you. Because of the state of financial markets I am considering parking the ‘savings’ type categories into my no fee investment account to maximise the interest ( a whole 3.5%). If I do this, I will still break it up into ‘virtual’ envelopes so that I know what is what and so I don’t start spending savings amounts or spending bills money by buying clothing. Having said that, the majority of my categories will be cash based. Things like groceries, fuel, pocket money, kids sport, entertainment etc work best if they are in cash for us.

Is your budget constantly changing? Have you noticed that it changes as the seasons change ? Do you successfully budget with ‘virtual’ categories ? I’d love to hear from you.


libby said...

Hi Michelle,

I'm continually updating my budget - I use the Simply Budgets program so it is VERY easy to do. However, I was NEVER able to stick to it until we went to cash budget (for everything but bills). We now have SAVINGS!!! Still most people who I know struggle and I recommend going to cash budget are still resistant to it. I have little containers for each category and it definitely makes you think twice about buying things.


Jen in NSW said...

If you would like to see how I use Excel to manage my "virtual envelopes" I would be happy to forward my file to you. I like to earn interest and it goes each month on to my credit card as my snowflake payment. It all adds up.

I find you through Simple Savings.

Jen in NSW

Anonymous said...

We use a cash busget and envelopes also. I've tried virtual envelopes numerous time but it never works.

Our busget changes every fortnight. my husband sits down and works out what bills we have and other occassional expenses and we then work out together how much goes in each envelope.

April Theme: Re-organise and Transition

In the Southern Hemisphere, April is in Autumn.  The days here are still warmish, but there is a sneaking whisper in the wind. That whisper ...