Holding Household Budget Meetings Help You Get Ahead Financially!
All successful businesses know that in order to be financially strong, they need to keep their eyes on their profits and losses. Budget meetings, although not the most entertaining block of time in the office, keep business ahead of the curve, in control of their finances, and aware of everything.
So why aren’t you having household budget meetings?
Just as budget meetings help businesses to see what areas they need to focus on to limit losses, so do they help you see which areas of your debt or spending are eating up the most of your money. With a monthly household budget meeting you can see that the “one or two times” you went shopping – an expense you otherwise would have shrugged off – might actually have eaten up $200.
Businesses also need to assess their profits to identify the projects that are benefitting them; when you know what areas of your life are the most profitable you are better able to decide which side hustles are paying off, or where you might tweak your schedule so you are working smarter, not harder!
Who should be involved?
Follow examples set by successful businesses and set up a time to have a monthly household budget meeting, either with yourself or with your significant other.
Even if you live alone, you should take your monthly household budget meeting very seriously. While it make seem ironic to have a meeting with yourself, just taking the time to make a quick spreadsheet of your income and expenses can be eye opening. You can also use this meeting to make private goals, and get ready to make changes.
If you are married or living with someone, your household budget meeting could go two ways: if your finances are separate, you will still want to discuss shared expenses, as well as your personal goals that may affect your lifestyle. For example, if your expenses show a massive loss coming from eating out, yet your roommate/significant other/husband or wife wants to get take out every other night, it’s important to talk about how your shared lifestyle will be changing.
When your finances are completely combined, household budget meetings can become pretty intense. My student loan debt is also my husband’s concern, so when he receives bonuses he has the same motivation as I do to put extra money toward these debts. While not all couples want to share this level of combined finances, it is just what worked out for us. Our household budget meetings look at both our incomes, any debt that belongs to either or both of us, and expected bonus income or extra money from my side jobs. Since everything is connected it makes for a longer meeting, but we also don’t need to worry about prioritizing things separately. We pick a goal and focus our efforts together.
If you have children it may be beneficial to have them attend your household budget meetings. Since family finances affect everyone, your children, depending on their ages, will want to know about changes and expectations. Children might even have their own input about ways the family can make more money or spend less. As an added benefit, children will see how serious finances are. Whether your goal is to counter debt – a surefire way to teach children about accountability and the effect of debt – or to earn more money to secure a vacation – instilling in children the truth that nothing in life comes free – you will be sure to make an impression that will last your children a lifetime.
The great thing about household budget meetings is that they can be as simple or complex as you would like. Usually an Excel spreadsheet that calculates your profit or loss for the month will suffice. The categories you use can be as broad or specific as you would like; for instance, tracking “groceries” is fine, but “food: other” might need to be broken down into further categories. Are you spending most of your money on takeout? Coffee? Lunch at work? Break these categories down to really see what you’re spending where.
I do not recommend calculating bonuses and extra money into your monthly household budget. While sometimes those bonuses are important for getting us all through difficult months, your goal is to have your main, reliable source of income cover all of your expenses. Your bonuses should be just that: bonus cash to put toward your debt, your retirement fund, or a vacation. How you use your bonus is, of course, your business – as long as you are not relying on extra, non-guaranteed money to support your current lifestyle!
This is where I branch off from the easy, straightforward method of Excel spreadsheets and go a little crazy. Whenever I want to make a change to our household budget, I present the idea to my husband as though I were selling the idea to a boss. I do this because I enjoy the preparation behind it; I research where we are financially, and where we will be if we follow with my proposed change.
I’m also ridiculously thorough and like to paint different scenarios, particularly when we are deciding which debt to tackle next. Often I will add up the numbers for various loans we have, and make a comparison so that we can make an informed decision. I think my husband finds these multi-paged proposals ridiculous at times, but I enjoy making them! They’re also great references to look back at to see the progress we have made.
So why monthly?
Many businesses function on a quarterly basis, but when it comes to household finances I believe meeting once a month, if not more often, is extremely important if you are trying to pay off debt. You don’t want to wait until April 1st to realize that the budget you started the year with wasn’t working after all, and that you are no closer to your goals than you were on January 1st.
Consider your bill-paying trends when deciding how often to have a household budget meeting. My husband and I are lucky enough to be a month ahead, and so on the one day a month we pay all our bills we have a household budget meeting to discuss where we are, and what we are attacking next. This method works very well for us, but won’t work if you are paying your bills paycheck-to-paycheck. In this case, you may consider discussing your spending and income weekly. What is important is that you do what works for you.
Do you have budget meetings? How often do you discuss your finances with your significant other, or review them by yourself?