Four Qualities of a Bulletproof Budget (Part One)

Hello & welcome back to Debt To Life! This week we’re excited to jump into the process of creating a bulletproof budget.

Today and Wednesday is all big-picture stuff (defining a bulletproof budget, parts one & two). On Friday, we’re going to help you create a bulletproof budget, step by step. Let’s jump right in by defining exactly what we mean by bulletproof!

A Bulletproof Budget is…

1. Simple

If you’ve never created a budget before, simplicity is the name of the game. Less is more. You can find hundreds of downloadable budget forms and spreadsheets online, however, most offer way too many features which often serve to overwhelm more than they help.

If you’re just starting out, you don’t need line items in your budget for retirement, investments, children’s college fund, etc. What you need is a simple budget that tracks your monthly income & expenses.

You can always add these items into your budget down the road, after you have established a track record of following your budget for a few months. What is important now is to create a habit of following your budget, and this will be difficult if your budget is complex and hard to understand.

Here are some tips to keep it simple:

  • Limit it to one page. If you’re using Excel, try to keep it where you can see 100% of your budget on one screen without having to scroll.
  • Omit items that don’t immediately apply. This is especially true if you’re trying to pay off debt. It’s pointless to save for your toddler’s college fund while carrying credit card debt. Pay off the high interest debt, then start saving for the college fund.

2. Agreed Upon

This is commonsense, so I won’t belabor this point. If your spouse doesn’t agree to the budget, it is far from bulletproof.

This also should go without saying, but a budget can’t be agreed upon when there are hidden expenses. You should never have income or expenses which are hidden from your spouse. No hidden credit cards, tax bills, subscriptions, expenses, etc. You get the picture. The only exception would be a surprise, such as saving for a surprise gift or trip. But even then I would err on the side of transparency.

What’s the easiest way to agree upon the budget? Simple. Create it together. We’re going to start talking about the process of creating a budget step by step in Friday’s post. But since we’re in the middle of the month, now is the perfect time to start planning and budgeting for next month.

If this is your first time to create a budget with your spouse, I would suggest that you schedule a couple of kid-free hours together in the next week or so (before the beginning of next month) where you have access to all of your financial information and a computer and can hash out a budget together.

More to come!

Stay tuned for the final two qualities of a bulletproof budget on Wednesday! As always, please post a comment or question below; we’d love to know if there’s any way we can better serve your specific needs! We respond to 100% of our comments.

Committed to your success,

-Wesley

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  1. Four Qualities of a Bulletproof Budget (Part Two) | Debt To Life -

    […] promised, today’s post is about the final two qualities of a bulletproof budget. In Part One, we mentioned the first two qualities, which are 1) Keeping your budget simple and, 2) Making sure […]

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