Review: The Budget Kit
Ms. Money Counselor and I have been hosting visitors the past few weeks—one of the perks of living on Vancouver Island, which is particularly beautiful in the summer! It’s not just us: the ferries to the mainland seem to have been unusually busy this summer. I think the current exchange rate favoring the American dollar vs. the Canadian dollar has enticed more Yanks than usual northward this summer. Or maybe a fraction of the combined Trump/Clinton haters—which appears to include in excess of half the U.S. electorate—are scouting for a new country. 🙂
I did take a break from the fun to review a personal finance planning resource called The Budget Kit, written by Judy Lawrence, who was good enough to send me a complimentary copy. Ms. Lawrence is a financial counselor, speaker, and workshop facilitator on basic money management. She first developed The Budget Kit in 1981 as “Common Cent$: The Complete Money Management Workbook,” and has updated the Kit over the years. I reviewed the Kit’s sixth edition.
The Budget Kit: My Overall Impressions
This much is clear: The Budget Kit is comprehensive—it thoroughly covers the fundamentals of basic personal money management—and easy to use. Ms. Lawrence’s well-organized, step-by-step approach, clear explanations, and “hand-holding” (for lack of a better term) for those who need it add much to the Kit’s value.
The Budget Kit will work best—and very well—for those genuinely motivated to do the groundwork necessary for most of us to reach our money goals. If you’re not into goal setting and if you don’t see the connection between doing the “heavy lifting” and achieving any goal, then the Kit may be a poor fit for you. The Kit is ideal for those truly committed to financial success but who perhaps lack fundamental knowledge about how to get started and organized.
If you follow Ms. Lawrence’s guidance and formula, I don’t see how you could avoid reaching your money goals, barring something like catastrophic illness or disability.
The Budget Kit: Overview
As Ms. Lawrence explains, the purpose of The Budget Kit is two-fold:
1. To help you keep proper records and get your financial information organized
2. To help you successfully plan and manage your finances
The Kit is worksheet-centered. Ms. Lawrence provides loads of paper worksheets in the Kit, and many of her worksheets, and The Budget Kit as well, are available as MS-Excel spreadsheets through a Budget Kit website.
The Kit’s worksheets are organized into three parts with these aims:
- Part One helps you focus on where you are and where you want to be financially
- Part Two is the action section—here you plan, project, and record your finances
- Part Three comprises a variety of record-keeping worksheets to meet different individual needs
I like that early on in the Kit Ms. Lawrence guides the reader through the steps to set financial goals. No money plan is likely to succeed—because you won’t stick with it—unless you know the goals you’re trying to achieve. Without goals, any plan feels like aimless wandering and busywork. Soon you’ll lose motivation. But if you set goals you really want to achieve, those goals become effective motivation.
I also like—and have written about on Money Counselor in somewhat different language—that you think about your savings as divided into three different areas:
- Reserve account—these are for known, periodic expenses (I call this piece Planned Savings, but it’s the same thing.)
- Emergency account—Money Counselor readers know the importance of an emergency fund.
- Goals account, or what Ms. Lawrence also calls your Dreams account. Want to take a family vacation to Disneyland in two years? Add it to your Dreams account.
Monitoring progress is also a consistent theme of The Budget Kit. Most importantly, you’ll learn how to produce and track your net worth statement—the best measure of your family’s overall financial health.
The Budget Kit’s worksheets will make it easy for you to, first, create yearly and monthly budgets, and, second, record your actual expenses so you can track how you’re doing versus your budget. As I’ve pointed out many times on Money Counselor, you cannot manage what you do not measure! Without budgeting and expense tracking, if you’re not achieving your goals, you’ll not have a good idea why, so you’ll feel de-motivated. With the information from a budget and expense tracking, you’ll know exactly why you’re off course (or that you’re on course!) and you can make adjustments to help assure you reach your goals.
The Budget Kit works whether you receive a constant paycheck periodically or variable income, based on commissions, for example. Ms. Lawrence also offers guidance on handling a money windfall and other special situations.
My Favorite Part of The Budget Kit
As a debt hawk, my favorite part of The Budget Kit is the section designed to encourage and make easier paying off debt. Ms. Lawrence provides charts that highlight the very high cost of financing purchases with a credit card. As regular readers here know very well, I emphasize again and again on Money Counselor that financial success is almost impossible if you carry lots of high-interest debt.
The Budget Kit section “Becoming Debt Free” offers charts, motivation, and step-by-step guidance to support debt repayment. The Budget Kit combined with my Simple Guide Be Debt Free! would virtually assure the success of your debt repayment campaign. Ms. Lawrence provides a worksheet for tracking your debt repayment progress, a great aid in maintaining motivation.
Who Would Benefit from The Budget Kit?
Nearly everyone could benefit from The Budget Kit, but only those serious about financial success are likely to stick with Ms. Lawrence’s program, in my opinion. I think the Kit would be especially helpful for:
- Young people who have recently joined the workforce and need help getting on track for financial success
- People with too much debt, especially high-interest debt like credit card debt
- People who set goals but often don’t reach them and become frustrated because they can’t identify the reasons for failure
- People who need a bit of help getting their finances organized
Are you serious about reaching your money goals? Then have a look at The Budget Kit. For a small investment, you’ll learn a lot and the guidance offered may make the difference between your financial success and failure!