What Is The Best Way To Make And Keep A Budget?
MINNEAPOLIS (WCCO) – Should tracking your money be a part of your daily routine? Or is it better to set a plan, sit back and watch?
Budgeting is more important now than ever before, but one study found 32 percent of us put together a monthly budget and only 30 percent have a long-term financial plan. That’s why WCCO went in search of the best way to budget.
We started our story with a shopping experiment at a Dollar Tree. With $5 in hand, Quinn and Alana Sullivan could choose to either spend it or save it. Even at 3- and 5-years-old, they’re already learning plenty of money lessons at home.
“We’d like to be better but we’re working on that,” mother Amanda Sullivan said.
A financial planner for 18 years, Andrew Rolnick worries about the social pressure people seem to put themselves under.
“People are not very good with their money. But the reason I have a job is to help them try to get better with it,” Rolnick said.
With a constant stream of posts and pictures on social media sites, it’s a different kind of keeping up with the Joneses.
“The most common thing I hear is, ‘How are my neighbors having a new car, a new addition?’ And I say they probably don’t have any wealth built up. They’re literally spending what they can,” Rolnick said.
He believes setting a budget is step number one and suggests taking an hour to write everything down in three categories: bills that have to happen, things that likely do happen like dinners out or buying clothes, and luxury items like vacations and gifts.
“It’s starting with a basic budget. Understanding why you’re trying to reach the goal you’re trying to reach, and then trying to figure out the numbers to make those goals happen,” Rolnick said.
Rolnick has seen the most successful savers continue to check in on where they’re moving their money. He doesn’t think most people are motivated to do it daily but says checking in monthly or even yearly makes a difference.
“It does take a while but you eventually compare it to the person that hasn’t and you’re miles ahead,” Rolnick said.
So what did Quinn and Alana Sullivan do with their $5?
“I got fingernail polish, hairbands, and Mike and Ikes,” Quinn said.
“I got gummy worms, mouthwash and lipstick, Alana said.
Both saved $2 — a lesson in budgeting from some small shoppers it would pay for many adults to replicate.
“Yeah I am proud. They’re listening,” Amanda Sullivan said.