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Successful Household Budgeting | Summer 2010 Out Here Magazine

Take the steps to create a plan that really works

By Hollie Deese

Creating a household budget may seem incredibly intimidating, but you can do it — with the right tools and the right mindset, says Dave Ramsey, personal finance expert, best-selling author, and host of TV and radio's The Dave Ramsey Show.

Getting the ball rolling by talking about it is a huge step in the right direction.

"The only families that we've seen succeed are the ones who are very intentional about this and make it a priority," Ramsey says. "Turn off the stupid television, put the kids to bed, have no distractions, sit down at the kitchen table, and deal with your life. If you don't deal with your life, your life is going to deal with you."

It won't be easy and it won't happen overnight, but with persistence and patience every family can create a budget that works for them.

Be Realistic

The biggest mistake in budgeting is being unrealistic about how much things cost. "I have people come in with $200 budgeted a month for food with a family of four. Well, that may make it a week. You wish you could do that but you can't do that," Ramsey says.

"As a financial counselor we have to adjust their expectations to reasonable ones. You have to be realistic about it."

Be Flexible

There is no perfect, generic budget template that works for each household, or for that matter, each month. "Don't try and do one budget that fits all because March is different than May," Ramsey says. When it's time to buy school clothes or Christmas presents, you'll be better prepared to handle those expenses by planning ahead.

Be Honest

Everyone has a spending history that includes mistakes, so lay it all out on the table before you begin.

A sense of shame may keep you from wanting to talk about it, but talking about it is exactly what needs to be done, Ramsey advises.

"Not that many people are smart about money, so the fact that we are talking about it at all puts us way up there on the list," he says. "Once you start the conversation it will take you to a lot of wonderful places."

Get Back to Basics

Some months will be harder than others, so knowing your priorities can help weather the worry.

"The very first thing you buy is food," Ramsey says. "The next thing you buy is lights and water. The next thing you buy is shelter. Transportation, keep the car running, gas in it. Then basic clothing, nothing fancy. Those are the basics of life. So when a family is struggling, we take them back to those immediately."

It doesn't make sense, he says, to pay your credit card if your lights are shut off. Budget the basics first.

Be Committed, Together

A budget will work only if everyone involved feels like they had a say in the matter. "No budget will work unless we've got all parties voluntarily, as mature adults, to agree to the plan," Ramsey says. "It just won't work."

By getting everyone's input every month, he says, each will feel more committed to the plan and will work hard to stick with it.

Hollie Deese and her husband pulled their credit reports as soon as she finished talking with Dave Ramsey.