Indiana Investment Watch- Financial Marriage Advice Basics for Newlyweds
Budgeting is one of the most fundamental marriage advice notes, yet few people actually do it. And even if you are one of the few who follows ANY marriage advice, let alone a budget, if you are recently married or engaged, it’s time to create a new one that fits your “we” lifestyle.
If you are one of the majority who has not created a budget before, it is likely just the word “budget” conjures up thoughts of penny-pinching and crunching numbers, but in reality financial marriage advice experts say that a budget is the cornerstone of a solid financial foundation. Thankfully, creating a budget really isn’t that hard to do.
Budgeting involves knowing how much money you earn and spend over a period of time. When you create a budget, you are creating a plan for spending and saving money. Why do financial marriage advice experts say that budgeting is important? It will help you save money, stay out of debt and pay your bills on time!
So how do you create a budget? It may be the easiest to follow marriage advice yet as it really only takes three easy steps:
- Know how much income you have coming in each month. If you and your spouse both work, you need to take into account both of your incomes, as well as any other sources of income that you might have (a side job or business, any interest…).
- Figure out how much you spend each month. Fancy lingo is fixed, variable and discretionary expenses. But basically fixed expenses just mean those “same dollar every month costs” like rent/mortgage, car payments, insurance, – you get the drift. Variable expenses still keep happening, but can vary a bit in the dollar amount (utilities, gifts, car repairs…). Finally, discretionary expenses are optional ones because we all need a few indulgences- things like going to the movies or out to eat. If you take all the fun out of your budget, it’s not likely you will stick to it!
- Now simply subtract your monthly expenses from your income. If you have extra money, you are doing great! If you are just breaking even or are going negative, financial marriage advice says look for ways you could cut back spending. Do you really need all of those cable channels? Could you rent a movie at home instead of going to the local theater? Think about those types of expenses as you look to trim down costs.
Creating a budget is just the first step! After setting up a budget that you can both agree on, financial marriage advice experts urge you need to stick to it! Create a master copy of the planned budget and then create a copy for each of you to fill in what is actually being spent in each category throughout the month. At the end of the month compare the actual budget to the planned one and make changes where needed. Understand that no one is “budget perfect” but like every other piece of marriage advice work together to stay on track!
Want to save for a big trip, new care or a cool retirement? Stay tuned next month for more financial marriage advice from Indiana Investment Watch on the Basics of Investing!