Know this: Finances are the leading cause of marital troubles. Doesn’t that tell you that finances are one of the most important parts of staying in love – more important, even than fidelity, at least statistically speaking? So be a grownup and do all of your research, and then talk with your spouse or if you’re in the middle of a divorce, you need to do this for yourself.
Your math skills are as important as your verbal skills here. Go one by one through the items with paper, pencil, and calculator or an excel spreadsheet at hand.
If you’ve never done a budget before, here’s a quick how-to:
Make a list of your monthly fixed expenses, and put the dollar amount next to each, like this:
Now make a list of monthly discretionary expenses, and put what you feel is a reasonable dollar amount next to each:
Children expenses
Payments to Creditors
Add up your fixed and discretionary expenses and write down the total.
Now add up your income:
Add up your total income and write down the total.
Now subtract total expenses from total income.
If the result is a positive number, your budget appears to be healthy, assuming that all the numbers you’ve estimated are close to reality. If it’s a negative number, then you need to either increase income or reduce expenses until the final sum comes up as either zero or a positive number. Otherwise, you will be going into debt each and every month and that debt will mount, and guess what – you’ll be in financial trouble. That’s a fact, not something that will take care of itself.
Here’s where true adult behavior is a must. You must realize that the budget exercise is not a homework assignment that you can do incompletely or poorly; there is no grade of “C” where money is concerned. You can’t add up your numbers, come up in the negative, and throw up your hands and say “I hate money. This doesn’t work. Why even try. Forget it.” Well, actually, to be perfectly accurate, you can, of course, and many do. Those are the folks who end up in financial trouble; they have mounting credit card debt or overdue bills and they’re constantly stressed about money. You can join them if you like.
But if you want to be free of financial stress and worry, you have to accept that you’re not done with your budget until you get an “A,” a grand sum total of income minus expenses being greater than or equal to zero. If your numbers add up to a negative, you will be in the red. You will. You cannot accept this and figure it will “all work out somehow.” It won’t, I guarantee you.
You must – I cannot stress this enough – you must keep working with that pad and paper or that excel spreadsheet and adjust those numbers on the budget until you have a healthy and realistic budget. This means you will have to make real-life choices that will change the way you are going to live: choices about the size and location of your home, the amount that you and your spouse will earn, the kinds of cars you will drive (or if you’ll take public transportation to save money), whether you’ll join a health club or choose jogging to stay in shape, and even when or if you will have children. Money affects how you live. How you live affects your money. Make choices that both of you can happily live with and choices that will keep your financial picture healthy.