Chances are if you ask the average person on the street if they follow a budget, they will say "no". Budgeting is not something that comes easily to everyone. Since many people are not taught how to budget in school, they are often left floundering to find out how on their own. Some people quickly work out the basics by themselves, while others will slide into debt before they seek the advice of a financial professional to help them straighten out their monetary woes. When a couple gets married, their budgeting skills may not be evenly matched. It's important for married couples to work out a budget early on and develop good financial habits together. Financial problems can create stress and contribute to many other marital problems, so avoiding those issues is always a good idea.
The first step to successfully creating a budget is setting down your out-of-pocket fixed expenses (typically considered to be required items, such as rent, insurance premiums, food, transportation, and debt payments) and discretionary expenses (typically considered to be "wants" that are variable, such as vacations, entertainment, eating out, etc). Discuss together all of your fixed expenses and your discretionary expenses and decide which category each expense belongs in. Some expenses may have a fixed amount and a variable amount, such a food: fixed is what you need to feed your family, variable is what you could spend eating out a few times a month or adding in additional treats). The next step is listing all your total sources of income. You will need to decide on a budgeting time period that works best for you. People typically create a monthly budget because that is how often many bills are required to be paid. Your monthly income should be more than your monthly expenses. If it is not, then you need to discuss your expenses together and figure out where you can cut your spending until it is. Or you may need to discuss other ways to earn additional income.
A good thing to start doing when working on a budget is for each of you to track your expenses for one week or even one month to see where most of your money is spent. Some experts suggest carrying a paper expense log with you (perhaps in your wallet) and keeping track of every time you spend money and what you spent it on. This can be an eye-opening experience. Once you see where your money is going it will be easier for you to identify the places where you can cut down and save money.
One of the most important aspects of budgeting is to work a saving mechanism into your budget. Most financial experts recommend that you save ten percent of your monthly income for emergencies or a rainy day. This savings should be considered a fixed expense that you cannot and should not change or vary.
Once you have made a realistic budget then the next step is to follow it. Even people who are heavily in debt will automatically see the beauty of budgeting. A budget helps you allocate your money wisely and effectively. In a budget you will see exactly where your money is going, why it is going and whether it needs to go or not. Once you have done all of this, then you will have a much more secure and healthier financial future; and in the end, isn't that what everyone wants?
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