We’re all at different stages of our lives. Some of us are getting married and others have been married for over fifty years. Some of us are moving into our first home, while others are working hard to make their mortgage payments. So the question remains: who should have a budget?
Well, to answer simply: YOU. No matter who you are or where you are in life, you should have a budget. For those of you who have never had one before, I’ve compiled some things that you should consider when creating your perfect budget.
#1) It’s Not A Root Canal
I realize that the term “budget” isn’t really one that brings forth fun images or parties but that doesn’t mean that it has to be a drag. There are two things to consider when you’re thinking about your leisure activities while staying on a budget:
(1) There are a lot of activities that are free or inexpensive: reading, having friends over to play games, potluck-style get-togethers, picnics at the park, camping, and even certain crafts like knitting, writing, painting, and sewing.
(2) It is both healthy and smart to delegate a portion of your budget to leisure activities. Remember that just because you’re setting aside some money for fun, doesn’t mean that you have to spend it all at once. You can spend a little now, and save a little for a road trip or a vacation in the future.
#2) Talk With Your Spouse About It
If you’re romantically involved with someone and you share expenses (live-in boyfriend, fiancé, husband, wife, etc.), you should be talking about your finances. The topic that results in arguments most often in relationships is finances – but it doesn’t have to have that stigma if you nip it in the bud. It doesn’t even have to be one of those serious conversations where you sit across from each other at the kitchen table.
Set aside a couple hours. Bring some snacks. Make sure that you’re comfortable. Bring all of the necessary materials (calculator, pen, paper, bills, paystubs, etc.). Have an open discussion about your finances. Try to stay open-minded, be considerate, and respectful.
#3) How Much Bacon?
Know how much you make. For some people, this may be simple. Your paycheck never varies and you get paid at a specific time every month. However, for others this may take a bit of calculation. These people will probably have an income that rises and falls depending on the time of year, amount of work, or any other variable. If that’s the case, average out the last six months to a year of recurring income.
#4) How Much You Owe
Determine your monthly debt payments. This means your loan and credit card payments. Figure out if you would like to utilize the snowball or avalanche method of debt reduction and elimination.
#5) Recurring Expenses
This process may take a month to figure out. For that month, you can try to average out your expenses but try to come up with a hard number. You can do this by keeping all of your receipts and utility bills that you accrue in one month. When you’re working this into your budget, keep your categories general: household or utilities, automotive, food, medical, etc. Create an average dollar amount for each category based on your findings.
#6) Use a Database
I love spreadsheets. Yes, they are boring but they do their job well. They keep track of a large amount of numbers. They can even do your calculations for you. I personally use the spreadsheet program that came with my office programs in order to keep track of my expenses and budget because it allows for a bit more flexibility than Budget-Specific Programs.
#7) Adjust Accordingly
Know that the point of keeping a budget isn’t to make sure that you’re not spending any extra money but that you don’t overspend your income and that you can make cuts to your expenses. Also know that your budget is not carved into stone. You can adjust it depending on your income that month or other emergencies that may come up.
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