Budgeting Lessons

Budgeting works only when you treat it as an intentional, ongoing plan — not a one-time spreadsheet. In this video, Michael Alman shares the budgeting lessons he’s learned with his own family: look back, look ahead, and plan for the whole year, not just the month.

Video transcript

Hi everyone, my name is Michael Alman. I want to talk a little bit today about budgeting and some of the lessons I’ve learned doing a budget with my family. The primary lesson for me is that budgeting is a planning endeavor. You have to lean into it and intentionally plan for your budget, or you’re going to end up overspending or underspending, and it’s going to be ineffective.

You need to take time each month to sit down — preferably with your spouse or significant other — and look back. Look at the categories where you did well, and reward yourself for those. Where did you overspend? Where did you underspend? Then look ahead: where are you going to have unexpected expenses, or something that’s irregular? You can’t just copy and paste your budget from one month to the next and expect it to work the same month over month.

Additionally, you should get in the habit of looking at your finances over the course of the year, not just the month. There are many expenses that come up on a yearly basis that we really should plan for — whether that’s Christmas presents, car expenses, or insurance. If you’re properly planning for those, they don’t come as a shock, and they don’t throw off your budget when they come around every year.

So remember: look back, plan, and be intentional with your budgeting and with your time. Properly set up a budget, look back, look forward, and learn from the lessons your budget is trying to teach you.