Repeat…budget is not a bad word. Yet, couples often have a hard time calmly discussing where to spend and how much. It’s time to get on one accord and be free from the stress associated with money.
Here are 5 things you need to know about managing your finances.
- The time to start is now! Regardless of how good or bad you think the bottom line is, don’t procrastinate any longer. Get your bank statements/bills/checkbook/receipts together. Make a list of expenditures for the past two months. Notice the unexpected expenses, such as car repairs, and the largest areas of spending.
- Know the ins and outs. How much net money do you bring in each pay period? What expenses do you have for the same period? What is your total debt? How much do you owe on credit cards? Do you pay off the cards each month, or keep a running total? It is impossible to gain control if you don’t know where you are or how to get where you’re going.
- Evaluate where you spend. Begin with the necessities then review the ‘other’ category. Find the holes that can be plugged. For example, have you inquired with your cell phone, cable, and car insurance companies about a better plan? Often, competition drives the cost down; you will not know the savings unless you inquire.
- Prioritize. Fixed expenses are…well, fixed. So, there is typically only a small amount of savings that can be expected from items, such as utilities, parking, and the like. Dining out and shopping can be prioritized. Determine what’s more important to you – dining out with friends at a 5-star restaurant, saving for a fabulous pair of red-bottoms, or upgrading your living space.
- An allowance just for you. One of the major keys to making a budget work is discretionary cash for you. After evaluating your situation utilizing Steps 1-4, decide on a percentage that will come to you in cash every pay period. Of course, this percentage must be factored in with your other expenses. It is not prudent to take a big percent for your allowance that prohibits your ability to pay living expenses. The purpose of the allowance is to give you discretionary cash to spend as you like without the accounting that goes along with other budgetary entries.
Budgeting should not be a dreaded task. It should be approached from a power position. It should be about expanding the buying power of every dollar and maximizing the benefit of your earnings. It should be about gaining freedom from the worries of a month lasting longer than the money. It should be a positive proposition. Because… you are in control!