Budgeting Basics to Keep Your Family Afloat
(That’s right. We’re doing this.)
1. Establish the discipline of monthly budgeting for short-term financial goals
Every month, I open my budgeting journal and draft a budget for the month. I start with all the income I know is going to come in, and I list all of the expenses I know I will have. And then I do this thing where I dump whatever is left over into little buckets that I will use later on in the year.
This exercise is annoying. I hate doing it. Sometimes, it makes me panic a little.
But it’s the only way I know how to plan ahead for things like the kids’ birthdays, holidays, vacation, school supplies and clothes, etc. etc. etc. It’s a habit I started long ago and have kept up faithfully because it works. I know there are very clever and user-friendly apps that exist to help with this; I know you can do it electronically, or keep it in your phone, but I remain a pen and paper gal — it’s what works for me. Do what works for you. This is the exercise that communicates to me how much I can spend at the grocery store every week. How many times I can fill up my gas tank. How many extracurricular activities we can participate in this month. Once I plan the budget, I walk into each scenario knowing in advance how much I can spend and still meet my financial goals.
And for this to work, you need to know your short-term financial goals.
We celebrate Christmas, and I like to go big at Christmas. It’s pretty tough for our family to travel because transporting oxygen is more difficult than amending an IEP (if you know, you know), so we go all-out for the holidays around here. For example, the year my son had two major surgeries, we spent a lot of our time in the PICU. That was the Christmas my daughter got the Barbie Dreamhouse, and I could have cared less what the price tag read. But here’s the thing: I know in January what I want to spend on Christmas in December, and I plan in advance how I’m going to do it. Now that I have a few years under my belt, I know roughly how much I need to save for the holidays, and every month I set aside some money in the monthly budget to make sure I have enough by December.
I host Thanksgiving. Next to planning and lawyering, cooking is my favorite activity, and Thanksgiving is my Olympics. I’ve gotten in the habit of saving my credit card rewards all year and cashing them out in November to pay for all the groceries I like to buy for Thanksgiving. Because I don’t want to be in Sprouts or Trader Joe’s or Whole Foods about to cry because the price per pound on fresh green beans is unconscionable or dairy is way too expensive due to supply chain issues. I want to make all the things and not worry about it.
That being said, you would not believe how little I spend on food and groceries every month. This is an area I have trimmed RUTHLESSLY. I can tell you from experience that cooking is cheaper than eating out. I happen to love cooking. I do it every single day. I actually really enjoy the challenge of making something out of almost nothing. The food I buy is high quality, but I plan how I’m going to use it, how long it will last, and I only buy what I need. I go to the grocery store once a week, four times a month, and no more. Cooking might not be your thing, but at least knowing how much you’re spending on food and planning in advance how much you’ll spend will help you meet your short-term financial goals.
2. Get a financial planner for long-term financial goals
How to find a financial planner:
- Ask your estate planner. Generally, estate planners already have financial planners that they work with or have referred clients to over the years, and most estate planners are only going to recommend other professionals that they know and trust.
- Ask friends and family. Find a planner who already has a good working relationship with someone you know and trust.
- Look for an independent financial planner who is a full fiduciary. And you should ask, “Are you an independent financial planner and are you a full fiduciary? Where is that indicated on your website?”
- Why: Because an independent financial planner who is a full fiduciary is not the same as a financial planner for a large company that has to sell a certain number of financial products every quarter in order to earn a promotion.
- Why does this matter? If your financial planner has to sell X number of long-term disability insurance policies, their advice to you and your family is going to be heavily influenced by that. An independent fiduciary has no obligation to sell these products to you and can give more objective advice.
- A financial planner at an independent firm who is a full fiduciary is not making a commission off of the products that are sold to you. Instead, that person is going to receive a fee from the accounts that they are managing for you, and you should be able to see the fee deducted right on the account statement. A financial planner who is not a full fiduciary may try to tout the fact that there is no fee coming out of your account, but rest assured they’re still being paid because they’re making a commission off of your investments and you won’t be able to see what it is. I’m a big fan of the transparency of a full fiduciary.