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home  ⟩  5 fast facts

5 fast facts about creating a budget

Pop Quiz! What’s the best way to save for your down payment and homeownership? Here’s a clue: It starts with a “B” and rhymes with “budget.” Yes! It’s a budget!

If you’ve avoided the word like the plague, don’t be afraid, poppet. It’s no more than a plan that lays out your income and expenses. Think of it as a friend who helps you make good decisions about using credit and meeting your financial goals, like saving up for your down payment or making a monthly mortgage payment.

1_checkpoints Talk with other members of your family.

Consider everybody’s needs and wants so all family members feel they are a part of the plan. If everybody realizes the rewards, you all may work harder to make your budget succeed.

2_checkpoints Be specific.

If goals are vague, objectives may never be met. You and other household members may have different ideas of what the end result should be.

3_checkpoints Be prepared to compromise.

If, for example, one person wants to pay cash for things and the other person prefers to buy on credit, they will need to discuss the pros and cons of both methods and decide on a middle ground each can accept. A plan cannot succeed unless there is a financial partnership.

4_checkpoints Set realistic goals and objectives.

Setting the bar too high may lead to frustrations that could cause you to abandon your plan.

5_checkpoints Exercise will power.

Try not to overspend — this will be your daily challenge. Each family member needs to encourage the others to stick to the plan.

2 bonus secrets to successful budgeting…

  • Be flexible. Your plan will require adjustments to keep up with your changing lifestyle and financial situation. Don’t make a budget that is so rigid that each new development requires an entirely new plan.
  • Develop a good record-keeping system. This will show how well you are following the plan and will allow you to adjust your spending to meet your goals.

Research budgeting apps or software, or if you like to put pencil to paper, check out this Monthly Spending Planner budgeting template to get started.