Having just given birth to Zach in October, we are setting some more specific family budget guidelines this year for Christmas presents. Baby Z’s hospital bills just arrived, and his stay cost a total of $2,000.

So with that in mind, we set a budget with these 2 principles in mind:

(1) Sticking to the budget.

(2) Getting the most out of the budget by determining if the gift recipient is a gift QUALITY or gift QUANTITY receiver.

• As far as setting the budget goes, we decided on a limit of $200 per person for Zach, Stephen, and myself.
• We also decided it was fine to stick to the budget within +/-10%. We are okay if it’s $180 or $220 as long as it’s roughly within target.
• Lastly, and this one is huge, to get the most meaningful gifts, we are finding out if the person cares more about the quantity of gifts or the quality of gifts.

I’m reading the book “Know yourself know your money“ By Rachel Cruze who is Dave Ramsey’s daughter.

What I learned from that book is that people have very different ways that they spend money.

Some people only want high quality name brand items, and they are fine with only one gift that is high-quality.

Other people it is all about the quantity. It doesn’t matter how high-quality the item is just the more the merrier.

When Steve and I first got married, we would have so many Christmas arguments, because I thought he was a quantity gift receiver, and he would put items that each were $200-$300 per item on his list.

I frantically would go out and buy everything on his Christmas list and would spend upwards of $2,000 on gifts for him. Yes 🙌 $2,000 and that is not an extra zero.

When I finally figured out he was a quality gift receiver, it relieved some pressure as I learned he was happy with just 1 gift that’s high quality and doesn’t care much about the quantity.

My mother on the other hand is a hoarder, so she doesn’t care what I give her as long as she receives a high quantity of gifts. This obviously is how I grew up and learned to give gifts. Thankfully, I met Stephen and learned there are other more meaningful ways to give gifts, and it really all depends on whether the person likes high quality gifts or a large quantity of gifts.

Hope this helps! Happy Holiday Shopping from us & baby Z.

Downloadable Net Worth Template

What should your ‘net worth’ be?

Why is it important to know your ‘Net Worth’ and set up a budget and create achievable SMART goals:

Well, we decided it was important because Stephen and I basically didn’t have any financial goals as we looked towards the future. We had saved the 25% down payment for a home, bought a home, were maxing out our Roth contributions, saving in our employer retirement plans, paid off debt, and were trying to figure out what the next step would be. As we scratched our heads staring at one another, we both knew that the one thing we wanted more than anything was ‘financial security.’ We didn’t want to feel this tinge of anxiety that we had always felt about money. We didn’t want to feel fearful of the future always wondering whether or not we would be ‘okay.’

So to get a hold of things, we moved from trying to follow the ‘rules‘ and do the right thing with our finances to building a vision for our family’s finances.

At the same time, I came across the book, “The Millionaire Next Door” by Thomas Stanley and William Danko. This book is a discussion and an analysis of real life actual millionaires whose ‘net worth’ is over $1 Million. The book surveys these millionaires and ask them what are some rules of life that everyone should live by.

Before reading this book, Steve and I were scratching our heads staring at one another and asking our financial planner (who couldn’t answer any of the questions for us… whether we should be saving, spending, or just taking more vacations – obviously this one is a YES.)

After reading this book we came across the Net Worth Calculator & Goal setter. The book says if you are over 40 years of age, your net worth basically should be:

Net Worth Target = Age * Annual Pre-tax Income / divided by 10.

Although we are not 40 yet, we have used the formula to start setting goals, and started meeting monthly to see where we are at towards our goal, and where we are missing the target.

Follow along with us on our journey at the IG account: financialdaydreamer.

“Don’t compare your situation to anyone else’s. The cure for comparison is contentment” Rachel Cruze.

Your income is your greatest wealth building tool. So I don’t want you to spend it trying to look good or keeping up with the Joneses.

It’s so easy to get caught up in our culture, and who we spend our time with matters. If we spend all our time with super materialistic people who are looking to “one up” each other and brag about what they just purchased, that can make getting ahead in life financially frustrating if not impossible. Our phones don’t make it easier either as we scroll through Instagram and see who has the newest everything.

Remember money is about so much more than money. Most of how we spend, budget, or don’t spend or budget is about what our beliefs are deep down.

Creating a budget is a good thing and it is a form of self-care and self-love. It is creating a plan for yourself and your family before spending any dollar of your income coming in.

Before our family started using the attached budget template, we thought we were doing a pretty good job of managing our finances. However, when we actually started budgeting, we realized that we really had room to grow.

Starting a budget took a lot of the stress out of finance eventually once we got the hang of it, so you have to trust me to stick with it for at least a few months!!!

The budget gave us a picture of where we really were financially, and not where we thought we were. Sure, we purchased $40k vehicles just like any other American, so we were probably doing good right?!

Wrong!? I had no clue we were also paying $30 a month in interest. That could be monthly date money instead!!! Ugh…we finally got so frustrated, we paid off that $40k truck once we realized it was stealing from our budget monthly in the form of debt!!!

The budget also showed us a roadmap of where we were headed and helped us dream of where we wanted to go.

It gave us the freedom we really needed to communicate what we were spending money on. The budget also gave us the freedom to say ‘no’ to certain purchases we might have said ‘yes’ to without the budget. For me, it gave me permission to tell my friends ‘no thank you,’ I don’t think I’m interested in a Hobby Lobby trip together.

Having a budget now in our marriage has really helped provide a map for our future.

A budget answers two questions: (1) where am I now & (2) where am I headed in the future?

Of course during the first month of budgeting, we absolutely hated it. We couldn’t get our first budget correct to save our lives, so many times we scraped it and gave up. But every time we gave up, we would get back up and start again.

I remember the biggest most heated budget argument we got in was over a very minor detail like what to label budget line items. Should it really be called “fun money” or should it be called “entertainment”, and who gets to allocate funds to the “fun money line?”

We finally just cut out two separate fun money budgets. One for him and one for her. I never felt like I really needed a fun money budget, because I’m so used to just not buying anything & focusing on investing anything left over. However, we agreed that we both need to have money to have fun with as well as save and invest, so we set up multiple pots in the budget.

What your relationship is like with money, and what your parents relationship is like with money determines what your budget roadmap will look like. Too often we don’t budget or save at all because our parents didn’t and the cycle continues. So ask yourself when you set up your budget these two questions and journal 📓 it:

(1) what was your parents relationship like with money? How did they view money?

(2) How do you view money and what is your relationship like because of that view?

Our thoughts & beliefs drive our perspective, which drive our behaviors and actions.

“Remember 80% of finance is behavior and only 20% is really head knowledge to get to your goals” Ramsey.

As we sat down and budgeted together, Steve and I both quickly realized our parents had very different approaches to money.

This is a really important thing to realize if you’re setting up a budget with someone else. Keep in mind that they might view finances very differently from you. Have compassion on each other, because we are all a work in progress…

It really doesn’t matter who you are, your family’s beliefs, relationship with, and values about money get ingrained into your values system.

How they treated money is often how you’ll view money as well.

If your parents spent like it’s going out of style, you’re going to feel entitled to spend, and it will take hard work, determination, and guts to begin to think differently.

Once the budget is figured out though, you’ll realize that the budget is the only way your own finances don’t get stolen right from under you.

Marketing from big companies will always entice you to spend before you budget, but I say budget before you spend at all. Remember your income is your biggest wealth building tool!!

The next thing we also realized when we started our initial budget was that it was missing a line for “unexpected” expenses, and so we set up our next budget by building in some margin for unexpected things that fluctuate month-to-month like gifts or drivers license fees.

Margin in that budget is what, in the long term, will help you build wealth if you don’t spend it all (which you shouldn’t as long as you make sure your expenses are less than your revenues in your budget). Whatever is leftover is your margin.

Over time, margin will add up over several months and that should help you achieve your dreams.

What do you dream about? Do you want to build some margin slowly over time in your budget to purchase a new home? Do you want to use it to buy some investment properties, or invest in some EFT’s or mutual funds. We can all ‘think’ we have margin left over monthly, but really until we start using the good old fashioned budget, it is really hard to see how well we are doing managing our expenses. It is even harder to start building financial dreams too until that budget is set in place! That budget will build freedom. I know it seems very counterintuitive, but I want you to be free to dream and free to build your wealth.

Try out the free budget template and start dreaming!