Knowing where your money goes is important. This is where a budget can come in handy!
Budgets are great for helping you see where your money goes and how you spend your money. They can be as complicated or as easy as you make them.
It does take discipline to make a budget?work, but once they do work the possibilities are endless. A good budget doesn’t make you feel restricted!
When looking at different types of budgets,?there are tons to choose from. Most people utilize a single household budget. There are others who use more than one budget for a single household. You may think this could be overkill, but here are some reasons why you might need more than one budget.
You’re Working Toward a Goal
Your regular budget marking how much money you have going in and how much you have going out is perfect to seeing how you spend your money. But, if you are working towards a larger financial goal such as saving for a house, buying a house, saving for a car, a vacation, etc., having a second budget strictly for that goal will help you stay on track to see how much you should be saving.
For example, say you are wanting to buy a car, but you don’t know how much to save. You could create a budget specifically for that car. Make a line item for the cost of the car, add insurance, gas and maintenance costs. This budget then will help you save for it, as well as helping you see if you can afford the car in the first place.
Budgets for a Specific Event or Holiday
Event and holiday spending add up quickly. A separate budget shows how much you spent and how much more you can spend without going over budget.
For example, if you are getting married, a separate wedding budget will greatly reduce spending on unnecessary items. Do you really need 100 doves to fly overhead as you exit the ceremony or will bubbles suffice? 😉
The same goes for a birthday party, or vacation. Setting up a small budget for events you know are coming up will take the strain off of overspending and allow you to be smarter with your purchases.
Budget for Christmas
If you have a large family, or love to buy gifts for everyone you know, Christmas spending adds up fast. A lot of people take on credit card debt at Christmastime, which can derail their other financial goals.
To help watch your spending and make sure you have the money, create a budget for Christmas. Write down who you need to get gifts for and the amount you want to spend. You can set this up in January, and save for it throughout the year. By saving early, you can start shopping early to buy gifts on sale throughout the year.
For Projects and Hobbies
Not all hobbies require a budget, nor do all household projects. But some expensive hobbies or large household projects may require a budget of their own. Don’t go blindly into a big project like a re-model without a separate budget.
Setting up a second or third budget shouldn?t be scary. Large corporations and businesses work off of more than one budget to turn a profit. Of course, yours doesn?t have to be that involved. Keep it simple so you can save for the things you want most in life.
Do you have more than one budget? What are your extra budgets used for?
Photo courtesy of: kschneider2991
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We have a single household budget, but we do have copies of that budget we use to model different situations.
For example, we have the current 2017 budget, but we have a 2018 model budget that we’ve started working on for next year. We also have a 2019 model budget we’re playing with – because our daughter will be out of college then so our finances will be very different (better!).
It’s great to run different scenarios to “test out” how changes will impact your finances and progress toward your goals.