How to budget money for financial success

To prepare families to become successful homeowners, Habitat for Humanity provides financial training. When we realized that families were struggling to take classroom principles and apply them to their personal situations, Greater Erie Area Habitat piloted an individualized budget coaching program, a success that has since become a requirement for our partner families.

We recruit volunteers with backgrounds in finance, banking or teaching and train them on key concepts that future Habitat homeowners need to master. Volunteers are then matched individually to each family.

With this program, families have paid off thousands of dollars of debt and are better prepared to take on a mortgage successfully. Michelle, who has been a Habitat homeowner for almost two years, sees a lasting lesson in her budget coaching. “I think before I spend and am teaching my kids, too,” she says.

How to begin

Our budget coaches ask a few current status questions.

• Do you pay all your bills on time?
• Do you pay all that is owed on a bill or partial payments?
• Do you know who you owe?
• Do you know what you owe?
• How do you track the bills once they arrive at your home?

Key concepts to cover

Budget coaches focus on a few basic topics.

1. Track your spending. Families begin a spending diary in our first session, an activity then incorporated into the budget process.
2. Wants vs. needs. With advertising everywhere around us, it is easy to be persuaded to purchase items we want, which might use the money for the things that are needed. Be clear on basic needs and plan to purchase those items.
3. Approaches to budgeting. Planning allows you to have control over your money; don’t let it control you.
4. Emergency fund. Be prepared. Life is going to happen, so plan ahead.
5. Financial goals. Setting goals allows for measurable progress as financial decision-making improves. It also encourages families to look forward and plan for the future in a tangible way.

Over time, we cover additional topics: savings, credit and credit reports, banking relationships, money pitfalls, and security. Families bring their questions to meetings to address specific issues, such as planning for retirement.

Budget coaching has allowed Greater Erie Area Habitat to meet families where they are financially and help them improve their financial situations significantly. A house is likely the largest asset the family will ever own; budget coaching can lead to their success. It’s an investment we are willing to make.

— Nancy Milkowski, Greater Erie Area Habitat executive director