Wednesday, April 4, 2012

Newly Married Budgeting

Well, it has finally happened. We got married!

Although it seemed like forever in waiting, it was done so quickly! I am very happy it has finally happened and we can just enjoy being married now. I woke up earlier than Josh on our honeymoon, so of course, I thought I'd update my blog while I waited for him to wake up so we can get pancakes :) Anyway, I thought I'd write about budgeting today..or at least the beginning of budgeting.

When I was single, I was the queen of budgeting!! I lived off of $90-120 a month after my stupid student loan bill each month. Now, I was lucky enough to not pay rent or insurance due to my age and my car is already paid off. So, I wasn't making a ton of sacrifices besides no internet or cable. Luckily, I love to read. All I really needed to ration my money for was food and gas. This seemed ludicrous to many of my friends, but getting out of student loan debt was a much higher priority for me than going out or using my money on frivolous items. I know this doesn't seem possible to many people, but it is a great lesson in discipline and will probably come in handy as a newlywed and when we have children. So, my tips to budgeting as a new couple.

1) Sit Down TOGETHER and figure out your income

Now, this may seem obvious, but a lot of people don't really know what they make each month or each year. I prefer to do a monthly budget, although I have recently read an article stating that a yearly budget makes people more cautious about overspending and so they give themselves less spending money and more budgeted money. That does make sense to me, but it also seems unrealistic because even after you make a yearly budget, you would divide it out to figure out how much you have a week or month to spend. In my mind it all adds up in the end. When you start figuring out your income, remember everything!! Because I don't make much money at my job, I have begun looking for other ways to provide income for myself including selling my knitted goods and using trusted survey companies(neither of these gives steady income, so I don't count them, but they are important to remember once your budget is up and running). Once you add together your income, you are ready to start your budget.

2) Sit down TOGETHER and figure our your outcome

Now that you are figuring out your expenses each month, don't forget a thing. Otherwise you could have a big problem on your hands. I suggest using a book or downloadable budget guide from the internet. Luckily, our book that was required for pre-marital counseling (which I highly recommend to do together) included a budget section. There were, of course, many sections we don't need yet or may never need, but it broke down so many different categories and was extremely helpful in jogging our memories for this we spend money on monthly. Some of these things include car insurance, car payments, cell phone bills, utilities (including garbage, water, electric), rent, fun money, restaurants, groceries, movies, clothes, student loans, credit card bills, savings, gifts, children costs, pet costs....and the list goes on and on. Make sure you have all of these areas written down before you start allocating money because it goes fast once you start.

3) Time to allocate the funds

Once you figure out where all your money is going, realistically choose how you split up your monthly payments. When I say realistically, I mean this in a couple ways. First, make sure you are giving enough money to each category. Obviously, this is extremely important or you will be in a world of hurt when paying your bills. On the other hand, when you are first starting out you may have to cut down on some costs. Let's say you used to buy coffee every morning before work. Now that you have a house payment, perhaps purchasing coffee at the store to make at home would be a better option ( I am full of ways to cut down on bills and the like which I will write about another time). I certainly don't think that you have to get rid of everything fun in life, but remember that when money is short, the necessities outweigh the frivolities. This seems like a simple concept, but I see people struggling with that every single day. If money is tight one month, cut the grocery spending and live off of rice, beans, and in season produce. It may not seem luxurious, but it will reduce your chances of adding up debt. And who wants debt because of their food bill?

If money is not short for you budget, that is awesome news! Then budgeting is an awesome way for you to save, save, save for fun things such as vacations, new "toys", having kids, or all sorts of things.

4) Write down EVERYTHING!

This may seem like a small detail, or something that can be overlooked, but it's not. Writing down everything is extremely important. Especially when there are two people who are doing this together. You each need to be responsible together about what you are spending. If you don't write it all down in the same place, then there could be big problems. I know that things come up and someone needs to spend an extra dollar or two here and there, but those things add up, so write them down. This also includes extra income you may have gotten that month. When I sell a knitted item, I write that down and add it towards another category. It depends on the month where I place it. If I needed extra grocery money because I had to take food to a party, then I add it there. Sometimes I can add it to pay more on my student loan, or if I am trying to save up for something I add it to my savings. Just evaluate your income for the month, and choose the best place to put extra income. Once again, write down where you put that extra money so you can see how your budget is working for you. This is another good reason to write everything down. If you see that you are spending a lot less in a certain area, then start putting that money toward something else. If it seems you are always right on the cusp for another area, try to re-allocate to better suit your needs. Having a budget is a process, and figuring out the best way for it to work for you is important. Just keep trying together to make it work!

If you have any questions, just let me know!!

*On  a side note, I know these tips don't take credit cards into consideration. My philosophy is to have a credit card for emergencies only. I never use my credit card because it is too easy to fall into a trap with a card since you don't see the money disappearing. I highly suggest using cash for your budgeting. If you have to use envelopes to divide it out, then do it. Like I said, find a system that works for you!

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