Many think that having a budget means not spending money, but that’s not the case. Having a budget means being intentional with your money. A budget is nothing more than a set of instructions that determine where your money will go so that you can achieve your financial goals. Whether it’s getting out of debt, saving for a family vacation, or receiving new Permanent Change of Station (PCS) orders, a solid budget will get you where you need to be!
I. Family Meeting. Budgeting is a family affair. Married couples and life partnerships usually include two different beliefs, strengths, and weaknesses when talking about money. However, one person’s goals and values are no more or less important than the other’s. Not only do you have to be on the same page with your partner, but teaching your children fiscal responsibility should be a top priority as well; this article from parents.com is a great resource.
Those budgeting for one should have an accountability partner as well. Whether it’s a trusted friend or family member, financial advisor, or an app, it’s a good idea.
II. Determine Your Expenses. Where is your money going? Take a deep dive analysis of your checking account statements, credit card statements, and everything you spend money on regularly. The crucial steps of determining monthly expenses require accuracy.
Personal finance trackers with expense calculators can be found in App stores, banking and financial websites, credit-repair websites, or PC software programs. Research to find the program that works best for you.
III. Understand Your Income. Figure your available monthly income (the amount of your take-home, or net, pay). Do not include overtime pay, bonuses, or the verbal raise that your superior keeps promising.
Now that you have done the work to set up the foundation, the next step is easy! Several resources and programs online help with the basic income over expenses equations.
I. Your Income minus Expenses should zero out each month. This does not mean you have zero dollars! It means that you have directed your cash flow with intention and accounted for every dollar you will spend.
II. Expert advice varies on what you should spend your money on, how much you should save, and how much you should donate. These theories have merit; however, they might not work for everyone because not everyone values the same things.
Review your budget every month. Does the plan still meet your needs and help you achieve your goals? If not, make adjustments or create a new budget that better meets your needs.
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