Did you ever ask yourself, “How does a budget work?” Do you like the word “Budget?”
We often hear people refer to budgets in negative terms. Words that imply pain or restriction or deprivation.
We have a different view of the way budgets work.
We look at a household budget as a positive thing.
It’s a tool that preserves our money and lets us enjoy life and the things we have. We think a budget is very similar to a dam on a lake. Keep reading and find out why.
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A BUDGET Like a Dam?
We’ve heard some people refer to trying a money management system as having used a “Dam Budget!” Obviously, their experience was anything but positive. We don’t think of budgeting as a chore, a constraint, or a budget restriction. But we do think of our money management system as freedom.
A Dam Controls Water Flow
A few years ago we took a trip to Las Vegas to visit an elderly aunt and uncle who live there. On the way, we drove past the Hoover Dam.
A Dam Helps to Build a Reserve of Water for the Future.
Steve researched it and discovered that Hoover Dam is the second tallest dam in the U.S.
Standing more than 700′ tall (that’s taller than two football fields!) It is one of 75,000 dams in the U.S. alone.
What Are Dams Used For?
Why do people build dams? That’s simple: To store water for future use.
They take a stream of water, stop the flow for a while to build a reserve, then they let the water flow out over the dam at a controlled rate.
The result is that water is stored for the future and allows people below the dam to continue to live normal lives even when drought conditions occur.
A Budget Restriction Controls the Cash Flow
Our personal budget is very similar to Hoover Dam!
This is exactly what a budget is for our finances.
A budget controls the flow of income and allows us to store away resources for the future.
Some of those future needs might be:
- grocery shopping
- buying clothes
- car replacement
- unexpected medical expenses
- college education for your children
- emergency travel to visit a sick family member or loved one
- saving to pay auto insurance once every six months
The list could go on and on.
Just like a physical dam requires time and planning to make it effective, the same is true of a financial budget. Once a budget system is built and the habit established to maintain it, it produces financial security and peace for years to come. So having a budget that controls spending on your cash flow is a good thing.
A Budget Helps Build a Financial Reserve for the Future
A Budget helps build reserves for the near future – like this month and next. It also helps to build financial reserves for next year and even many years to come.
Future needs can be short or long-term, things that you’ll buy this month or later in the year or once every few years. Longer-term needs might be a new appliance, furniture, paying auto insurance once every six months, or paying cash to replace an older car.
But the reserves from a budget can also be used to pay for unexpected medical expenses; college education for your children; emergency travel to visit a sick family member or loved one — the list could go on and on.
Just like a physical dam requires time and planning to make it effective, the same is true of a financial budget. Once a budget system is built and the habit established to maintain it, it produces financial security and peace for years to come.
How you Control your Money Determines Your Future
Your financial success is never about how much you earn, but how much you keep and save. Budget restriction can be a “Happy Budget” if you look at it in a good way.
A family earning $200,000 a year and spending $225,000 is no better off than a family earning $50,000 and spending $55,000. They’re both headed down a dark path of debt.
But a family who has learned how to manage their $45,000 income and find a way to put $5,000 in savings is the richest of all. Managing your money so it goes where you want it to is the key – simply put: we all need a “Budget” to control the flow of cash.
We have created two resources to help you manage the flow of money in your house so that you can build a reserve to get you through the dry times.
Our first book: America’s Cheapest Family Gets You Right On The Money has lots of money-saving tips and one whole chapter devoted to how we set up and utilize our budgeting system. We’ve been told that it is the simplest and easiest budget system most people have ever read about and implemented.
More than that, for our family, it is the single most powerful tool we have used to reach our financial goals . . . it helped us pay off our first house in only 9 years, pay cash for all of our cars and control our other living expenses so that we always have an excess and could survive hard times and still laugh and have fun as a family.
A New Way to Budget!
A few years ago we developed America’s Cheapest Family Budget System kit and we’re having trouble keeping up with the requests for it!
This is the exact system that we’ve used for more than 40 years. It comes complete with a binder, Stewardship sheets, pen, pencil, calculator, instructions, worksheets, and digitally delivered forms and Excel worksheets.
This system doesn’t require a computer, it’s portable, and a husband and wife can work on it together. Talk about getting on the same page financially! This is a tool that will foster communication, togetherness, and the building of a secure financial future.
You can make this year your best year ever for finances! Is it time for you to start building a dam for your money?
Watch the Video Below to Learn More about how a budget works to keep you debt-free.
If you’re interested in what you can accomplish with a budget, watch this video. We’ll share how using our budgeting system we were able to pay off our home on an average income of only $35,000.