How To Budget: A Typical Family
Most finance gurus recommend a detail zero based budget where every dollar gets a job as it comes in. That is brilliant and works to get you and keep you out of debt and to plan for longer term saving goals.
This didn’t work for us to pay for a private school education because tuition is instant and needed now, not in the distant future. As soon as your children go to school you have to pay right. You can’t benefit from compounded interest over many decades or paying it down over time if you have private school as the goal for your child.
A more focused approach made sense for us!
How To Budget: A Private School Family
A private school family must set a tuition payment away as soon as the paycheck comes in and live off the rest. This is similar to the pay yourself first method used for retirement accounts. In fact it’s the same thing.
Here is what a private school family budget looks like:
- Pay your self first – Retirement
- Pay first – Tuition
- Pay first – Food, Shelter, Clothes
- Build an emergency fund as you can
- Pay for other stuff
When a pay check comes in, automatic transfers are set up at the bank to take the correct portion out and transfer it to a savings account. And the day before the tuition payment hits, the correct amount is taken out of that savings account and put into the checking account to pay the tuition amount.
We use a similar method for the housing payment and anything that remains is spending money.
Budget: A forecast of the future
The reason we take this approach is to enable us to pay for the tuition without fail. Planning a grocery budget, a vacation budget, a clothes budget and so forth is error prone. Some months you are going to be off and tuition (at least for us) is big expense that can’t be adjusted because we over spent somewhere else. All that budgeting work is really difficult and stressful. You end up seeing a bunch of categories that you can’t afford and it makes you feel bad.
Make It Easy Instead
We take a simpler view. We pay for tuition and basic expenses and find joy in simpler experiences. A walk in the park, a good meal or a week together as a family. Vacations are for wimps and instead we create a life you don’t need a vacation from and instead focus spending on a few key things. For everything else, we are ok with second place.
This focused style of budgeting is a bit easier to manage and a bit less time consuming. Walk through our budget:
Food: Lets keep it low but still eat well and go out.
New car fund: Zero
Travel budget. Zero.
Home addition budget. Zero.
Vacation home budget. Zero.
Of course to do this you need enough income to be able to pay for your basic expenses and a tuition. Do that analysis first before signing up for a private school tuition. There should be ample wiggle room between your historic food/shelter/utilities expenses and what it would be with tuition. That wiggle room is the amount of tuition you can pay. Don’t count on future raises or “making it work”. Measure and then decide.