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5 fast facts about creating a budget

By Robin Wetherbee

September 2015

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. 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. 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. 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. Set realistic goals and objectives.

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

5. 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 our monthly budget worksheet to get started.


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Robin

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Robin Wetherbee has been writing for MGIC about mortgage insurance and homeownership since 1989. She and her handsome husband reside in Milwaukee’s Bay View neighborhood. They share their freshly empty nest, which she calls her “Miracle on 34th Street” house (if you’ve seen the 1947 movie, you’ll know exactly what she means) with their big old black cat, Max Rayfield Gilhooly.
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