This is how my family budgets ALL Year long:
(this is an excerpt from my eBook – Teach Your Kids the NEW F-Words…Financial Freedom!)
I use (and teach my clients) a very simple money management system, much like a system at a chain restaurant, every dollar has it’s “job”.
When I am Old 10%
Let’s Give 10%
Let’s Play 10%
Big Dreams 10%
My Necessities 50%
1. WHEN I AM OLD This is for your retirement. You are NEVER EVER to spend this money. You will invest it…only invest it. (On what? You’ll discover it in chapter 6). This account will set you up for retirement, for when you are old. (If you are already “old”, don’t worry, you will just have to focus a little more attention here!)
2. LET’S GIVE Teach the importance of giving. This is for your most worthy cause, something that matters to you. This account is about experiencing the joy of giving. Some who can’t afford to give money right away may give time, donate blood, etc. As long as it is giving, it counts. Each family member will have their own “cause”. Please, allow everyone to make their own choices. This may be their first “tithing” experience, and it is very important.
3. LET’S PLAY This account is for you to spend on whatever you want, no questions from anyone! It can be that new game, a day at the spa, whatever. It is completely up to YOU! One rule: it must be spent…every month…on play only! If you really want to pamper yourself it can be saved for 3 months, but no longer! This account is meant to be spent!
4. MY EDUCATION This account is for your life long learning. Those piano lessons, the dance classes, even the books you buy on self help (like this one). All of this is your education. You need to be educated on a regular basis. It is the law of the universe. If something is not growing, it is dying, your mind included. Hmmm…if you are not growing you are dying…
5. BIG DREAMS Save for bigger items, new computer, new car, perhaps that family vacation, whatever your long term dream is. Usually it is saved for at least a year, sometimes more. It is totally up to you. What do you really want that you always say you “can’t afford”? You will be surprised how easy it really is.
6. MY NECESSITIES This account is for necessary things. For kids it is for those “just have to have” $80 jeans or that $100 new game. For adults, it really is about the necessities…the mortgage, car payments, groceries*, these are all your necessities.
When families understand that money has a JOB in their home and there is no attachment or emotion to it, then everything gets taken care of, everyone gets what they want and there is ease and understanding.