Stats say that the majority of married couples (especially newlyweds) have a lot of fights about money. In fact, I’ve heard that money and moving are the two biggest hot topics in a relationship. Brian and I don’t fight much about money, and I’ll take credit for that; yep, unabashedly, I claim the gold star on this one.
Growing up, my family wasn’t rich. In fact, my parents have lived a very exciting, adventurous life, and some of their gambles lead them into some penny-pinching times (but of course, provided them with some great stories). So from an early age, they impressed upon me the importance of budgeting. I ended up hashing out a system that works for me, and I’m going to share it with you here.
I warn you now, it may seem a bit silly, but it works. I haven’t put a person on this system yet who didn’t see an immediate difference. So I invite you to try this out, and see where it takes you.
Even if you feel like you've got your budget under control, I invite you to give this a try; just for fun, you can see if there's any sort of difference. (I wager there will be!)
PART I: THE BIG PICTURE
LIST YOUR EXPENSES: List them all, with the date they come out. Some expenses are once a month, and some are bi-weekly; make sure you list them all. Add them up, then compare them to your take-home paycheque. Ideally, you will not only have enough to cover your expenses, but you will have a little extra. This little extra will be your ‘sock money’; more on this soon.
Be realistic about your expenses. If you know you need 80.00 for gas each pay, but you’re only budgeting 60.00, you’re going to regret it later.
WHAT IF YOUR EXPENSES OUTWEIGH YOUR INCOME? This is usually where people struggle. I find that for many people, it’s the cost of housing that puts them over the edge. This is the time to make hard decisions; you may have to consider moving to a less expensive home, or you will need to skimp in other areas to make up the difference. Perhaps you’ll need to drop that gym membership for a while, or hold off on that art class. Hey, you can still use yoga podcasts, and do some oil painting on your own!
THINGS TO BUDGET FOR:
Allowance: Include an allowance for yourself. It’s not indulgent, it’s realistic. I recommend you budget $10 per day as your allowance. This is what I use for my latte, my impulse earring purchases, and my rock climbing fees. If you spend $20 on Monday, you’ll need to go spending-free on Tuesday or a different day that week. You may currently not allow yourself any allowance, but I urge you to give it a try. The trick to allowance is adhering to it: don’t just give yourself an extra 20 bucks if you overspend!
Debts: Debts need to be paid. I always try to pay more than the minimum, otherwise the interest rates will slowly kill you. Try to put even an extra $20 onto your minimum payment. Include all your debts, even the family ones.
Utilities: Sometimes people forget to budget for utilities; same goes for cable/internet.
Sock money: After you’ve paid all your expenses, this is the money that you take out of the bank and put in a sock for safekeeping…or that you store in a separate bank account. I have a savings account now, but for years I used a sock, so the name has stuck.
Birthdays and holidays: These are one-time expenses each year, but don’t forget to budget for them. Write all the gift-giving holidays and birthdays in your calendar, with a reminder at least 2 weeks before. This way you can budget well in advance.
AUSTERITY MEASURES DON’T HAVE TO SUCK. Remember, if you’re figuring out your numbers based on my system here, you’re going to have $300 of allowance each month to enjoy, guilt-free. People often think that budgets are horrible, skimpy things that don’t allow for any joys in life; those types of budgets are very hard to stick to.
-Write out all the numbers mentioned above.
-Go get a stack of banker’s envelopes…you know, those tiny ones that fit snugly ‘round your bills. If you can’t get a dozen from your bank, go buy some at Staples.
Tomorrow, we’ll tackle Part II: putting the budget in motion.