Monthly Focus: Budgeting and Financial Communication

Our focus for November and December is on budgeting and financial communication.

Keep in mind that the word "BUDGET" means something different to everyone, and that that is okay. They way that you choose to budget may not be the same as your neighbor, or even your spouse.

BUDGET is not a bad word! The goal of a budget is not to restrict you, starve you of fun, or make you miserable. The goal of a budget is to help you be in control of your money, to be responsible with your stewardship.

While the execution may vary, the basic principle of a budget is to help you spend less than you earn. There are a multitude of ways to do that. I have heard ideas ranging from envelopes of cash for expenses, to complicated accounting practices involving electronic tracking of expenditures. No way is going to be the right way for everyone. You have to find a way that fits your finances, your lifestyle, and your knowledge....and keep in mind your way may change as those factors do!

With that said, there are a few things to keep in mind when making a budget:

1. Know what your expenses are. You can't budget for things you don't know about or acknowledge. Keep track of what you spend for a time (most appropriately for a month), holding on to receipts can help. After tracking your expenses for a time you will have a better idea of where your money is going.
2. Be realistic about your expenditures. Make sure your budget realistically reflects your needs. Budgets need to cover not only your bills, but also your expenses. So, if you buy that latte or donut every morning but don't have it as part of your budget, you could get derailed pretty fast. You have to be honest with yourself (and your partner) about what you spend and where you are spending it.
3. Know what your income is. This seems pretty easy, as we all generally get paystubs or some other document telling us how much money we are receiving. Make sure you know how much you are getting, especially keeping in mind things like taxes, fees, retirement, etc that may be automatically removed from your pay before it gets to your bank or your hands.
4. Make sure your budget doesn't exceed your income. When you match your expenditures up to your income, make sure that they are at the very least the same, but preferrably having expenses lower than income. If you find that your expenses exceed your income, it's time to do a financial inventory and see what can be cut or at least cut back.
   
5. Remember budgets are dynamic. What your budget looks like today will likely be different than it will look in a year or two. Make sure to periodically review your budget to make sure it continues to meet your needs. You may find expenses that are new that need to be added, old expenses that no longer exist, or amounts that need to be adjusted. You may start out with a simple budget which may become more complex as you learn more about your money and budgeting. Don't be afraid of the change!
   
6. Share the budget. If you live with other people (like children or a spouse) make sure that they know what the budget is....especially if they spend money from that budget. This can also be a useful teaching tool for your children.
7. Don't be afraid to get help. Budgets don't make themselves, and financial education is not generally prominent. Don't wait to make a budget simply because you think you don't know what to do. There are plenty of resources (many of them free) to help you get started. Look online (see the sidebar for some links to financial resources), you can find free worksheets, budgeting tips, even forums for people to discuss budgeting. Ask friends and family for suggestions or help. Make use of community resources available. Don't be afraid of budgeting, learn, get help, and get started!
   

While budgeting will certainly help with gaining control of your financial help, if you have a partner, financial communication is another vital aspect of your financial health. Your finanical health is a joint venture between you and your partner, and you both are stewards of that financial health, responsible for its condition.

Just as there are a variety of ways to create your budget, there are a variety of ways to divide responsibility and facilitate communication. Regardless of how you choose to budget or divide the financial responsibility, good commuinication is essential.

Here are a few ideas on how to facilitate financial communication, and keep everyone in the loop, that were shared at our monthly meeting, and elsewhere:

1. Hold regular "financial" meetings. This was the most stated suggestion. Frequency varied from weekly to quarterly, but most suggestiosn were for monthly meetings. You and your partner can go over your budget, discuss expenses for the month, discuss future expenses, and share your experiences with your financial responsibilities.
2. Be financially honest. You shouldn't be afraid to share your financial concerns, successes or failures with your partner. It may not be easy, but financial honesty is essential for good financial health and a good partnership.
3. Have some place where financial health is documented. These suggestions ranged from a checkbook ledger to electronic logs (such as money management software). Having this information written down can help to facilitate communication, and help you both keep a handle on your financial health.
4. Be involved. While one might be responsible for paying bills, and the other for buying groceries, you should both be involved. You may choose to divide financial responsibility in different ways, but make sure you both participate in this important aspect of your partnership.
5. Take a money day. We all take sick days, vacation days, even holidays, but how many people think to take a money day? Take a day, sit down with your partner, and talk about your money. Take your monthly meeting to a new level. This can be done as often as you want, but is recommended that you do it at least once a year. Set financial goals, review your budget and make any changes needed, take stock of your financial health. Discuss your financial responsibilities with your partner and make changes in that if needed. Don't want to pay bills this year, well maybe you can trade responsibilties or adjust your range of responsibilities to what suits you now. Give your financial picture a good looking over.
6. Make your plan together. While, on some level, this may be best done before your partnership begins (in fact experts recommend you discuss finances before getting married), sometimes we get started late in the game. You may have missed the pre-marital window, but that is no reason to not have a plan. Discuss with your partner your expectations for your finances and for each other. Very rarely do two people with exactly the same financial ideas get married. You'll likely have to compromise, but if you sit down together to make a plan, it is more likely to work. But dont' forget, even the best laid financial plan needs to be dynamic. Life changes and so will your plan!
   

The process of having a workable budget and good financial communication will take time....nothing that important happens overnight! Don't be discouraged if the process seems to take longer than you would think or like. By taking the first step to create a budget and share financial communication with your partner, you have done the hardest part.

Financial responsibility, living with in our means, and being financially healthy are important aspects of our lives. This is made even more poignant by the recent economic crisis sweeping across the world. Some times it is hard to think of the "lean" times when there is plenty, but the lean times will come, and having a handle on your finances will make those times much less scary and stressful.

Resources and Articles:

Happily Living Within Our Means

Family Finances

Where does the money go?

Five Steps to Financial Well-Being

Know Where your Money goes

Make Marriage a Partnership - Couples Counseled at Fireside

Mini Challenges: Review Your Budget

Our Nov. 15 mini-challenge will be a budget review. Financial preparedness is an important part of Provident Living, especially in these perilous financial times.

One essential step to being financially prepared is having a budget. It doesn't have to be complicated and involve the use of advanced mathematics, it just has to work for you. Budgets often start out simply, as you learn about your finances, and can evolve to be more complicated as life changes and you get a better hold on your financial health.

So the challenge this term is to review your budget. Make sure it is still working for you and your family. Are there new expense streams that you aren't including? Are there old expense streams that you can eliminate? Have you considered adding a "rainy day" fund to your budgetary expenses? Take time with your spouse to review your budget and make any changes that might be necessary.

If you don't have a budget yet, this is a good time to get an idea of what you might need. There are several great resources for starting a budget.

The Church of Jesus Christ of Latter-day Saints offers a basic budget worksheet.

Brigham Young University also offers a series of on-line courses in personal financial management at their new personal finance website.

Other resources are available from MSN Money, ranging from topics such as budgeting to college expenses.

Even the government offers resources for personal financial management through the Federal Reserve.

Talk to your friends, your neighbors, your spouse. Use the resources above, share your ideas, your successes and your failures. Take this time to get a look at your financial health.

Monthly Focus: Making a Plan - Updates

We had our first Provident Living meeting, and we discussed creating our Emergency Plans.

Here is the text of the worksheet I created for the meeting (you can copy and paste into a Word document):

**************************************************************************************
A. Consider Family Size and Composition, and take into account specific needs for different individuals:
_____ Children (0-3 years)
_____ Children (3-12 years)
_____ Children (12-18 years)
_____ Adults (18-65)
_____ Adults (65 and over)

B. Get Informed About your area:
__ Local concerns or issues
__ Community Disaster Plans
__ School and Workplace Disaster Plans
__ Emergency Warning Systems


C. Discuss different disaster situations and know which ones apply to your area:
__ Blackouts
__ Chemical Emergencies
__ Drought
__ Earthquakes
__ Fires
__ Floods
__ Heat Waves
__ Hurricanes
__ Mudslides
__ Terrorism
__ Thunderstorms
__ Tornado
__ Tsunami
__ Volcanoes
__ Wild Fires
__ Winter Storms


D. Be sure to know how to care for pets, persons with disabilities, the elderly, or special medical conditions, as they apply for your situation.


E. Pick two places to meet:

Near your home in case of a sudden emergency, like a fire.
__________________________________________________________________________

Outside your neighborhood in case of a disaster which prevents you from returning home. Make sure everyone in the family knows the address and phone number.
___________________________________________________________________________
___________________________________________________________________________



F. Choose Emergency Contacts, and make sure family members know contact information:

__ Local
___________________________________________________________________________

__ Out of State
___________________________________________________________________________

__ Out of Country
___________________________________________________________________________


G. Complete This Checklist:
__ Post emergency telephone numbers by phones (fire, police, ambulance, etc.).
__ Teach children how and when to call Emergency Medical Services number for emergency help. (Remember that 9-1-1 isn't universal, so find out what your EMS number is)
__ Teach each capable family member how and when to turn off the utilities (including but not limited to, water, gas, electricity). This will likely require you to find the utility “mains” to your home.
__ Review your insurance coverage, and make sure that you have contact information for the insurance company.
__ Get training on how to use a fire extinguisher (ABC type), make sure all family members know how to use them, and show them where they are kept. This may mean you need to buy one. You can usually find them at many discount, hardware, and auto stores.
__ Install smoke detectors on each level of your home, especially near bedrooms and kitchens. Consider installing Carbon Monoxide detectors as well (especially important if you use Natural gas or other utility sources which can produce the fumes).
__ Find and correct any hazards that may exist in your home.
__ Stock emergency supplies and assemble a Disaster Supplies Kit (aka a 72-hour kit). Information on what you may need for this kit can be found at www.redcross.org.
__ Place Disaster Supplies Kit in easily accessible area, and make sure everyone knows where it is.
__ Take a first aid and CPR class, and make sure all eligible family members are also trained.
__ Determine the best escape routes from your home. Find two ways out of each room. Make sure family members know how to get out of commonally used rooms (family rooms, living rooms), and how to get out their own bedrooms.
__ Find the safest places in your home for each type of disaster, and the fastest route to those places. Make sure everyone knows where to go and how to get there.


H. WRITE YOUR PLAN DOWN!! Make sure you have your plan well documented, and have it somewhere family members can easily look at/access it. For younger children consider adding picture aids to help them understand and remember specific parts of the plan.


I. Practice and Maintain Your Plan

• Remind your kids every few months or so about the plan. Review information they may have forgotten, or information that has changed.
• Commit a weekend, a holiday or other family time to updating telephone numbers, buying or replacing emergency supplies and reviewing your emergency plan with everyone.
• Conduct fire and emergency evacuation drills regularly. Consider focusing them around times that are memorable (Daylight savings time switch, holidays, birthdays), so you don't forget to do them!
• Rotate and replace stored water and stored food in your Disaster supplies kits as needed. Make sure to stay on top of expiration dates.
• Test and recharge your fire extinguisher(s) according to the manufacturer's instructions. Your local fire station personnel can likely show you how to do both.
• Test your smoke detectors at least monthly and change the batteries at least once a year. Consider scheduling battery changes during memorable times, such as the Daylight Savings time switches (semi-annually).

Remember to make use of the many resources that are available on this subject. If you have questions, most local Red Cross chapters can offer help on making an Emergency or Disaster Plan. Your community may also have resources to help with this planning. Consider contacting your community's emergency management agency for help or information.

You can also visit the following websites for more information:

The American Red Cross
Ready.Gov
Prepare.org
FEMA (also has a section of resources to be used specifically with children)
***************************************************************************************

Remember to check out the links at the end of the worksheet for a lot of great information. You can usually contact your local Red Cross chapter for detailed information on local concerns or disasters.

Use the resources to help you make a plan that works for your family. Not all the plans will be the same. Even if you just make a fire escape plan, something is better than nothing!

Monthly Focus: Making a Plan

Every month, we will try to focus on a specific topic within the realm of Provident Living. This month, our focus will be on creating a disaster plan.

Everyone needs to have a WRITTEN disaster plan, and that plan needs to be shared (and practiced) with every member of the family.

What your plan includes will depend largely on where you live (so if you live in hurricane country your plan might be different from someone who lives in earthquake country), your family composition, and the resources available in your area (such as family nearby, local emergency services, hotels, etc.).

There are several resources for ideas and advice on creating your disaster plan.

The Department of Homeland Security has created Ready.gov, which has a variety of Emergency Preparedness resources. They have several documents and brochures that can help you.

One important worksheet they have is a Family Emergency Plan worksheet, on which you can record important vital information on family members, emergency contact information, and other important data.

The American Red Cross also provides a comprehensive range of preparedness resources. They have a section dedicated to making an Emergency Plan, which can give you some great ideas on how to get yours started.

In addition to information on the Emergency Plan, the Red Cross also offers advice on Evacuation Planning and Sheltering in Place (in case you can't get out during a disaster or emergency), which are important components in making your Disaster Plan.

You can also find information on how to prepare for a variety of natural and man-made disasters and situations. This information can be helpful for those living in areas with specific concerns (such as hurricanes and tornadoes).

So here is the challenge for the month:

1. Read through these resources.
2. Get ideas about what your plan needs to include (based on your specific circumstances and family composition).
3. Hold a family meeting and talk about what your plan will be.
4. WRITE YOUR PLAN DOWN. Just talking about it isn't enough. You need to have a concrete plan that is written down. You also need to remember to periodically review the written plan, and make changes if necessary. If you have small children who cannot read, it may help to create a picture guide to go along with the written plan.
5. KNOW THE PLAN. Share the final plan with all family members, and make sure that each individual knows what they should do in the event of an emergency or disaster.
6. PRACTICE YOUR PLAN!! It won't do you any good if you don't use it. This part is especially important when you have young children who may not be able to simply memorize the ideas. Practicing the plan will also help reduce the stress and fear that you may face during an actual emergency.

Making your plan is an important first step to being prepared, and that is our goal for this month, to take that first step.

Please share your ideas, your struggles, your advice, your successes with this monthly challenge.

I'll post more information as I find it out!

September is National Preparedness Month!

We're not the only ones trying to be prepared. The Department of Homeland Security is spearheading a national campaign on preparedness.

September has been designated as National Preparedness Month. Check out their resource page, Ready.Gov, for great information, guides, and planning materials.