If you pay bills every time you think you have extra money, you get ahead and stop living paycheck to paycheck. Even an extra $20, could add up if you pay it as an extra debt payment. Change your mindset from “What can I buy?” to “Where could I put this aside to help me?”
“Money issues are so troublesome that people who say they’re experiencing stress in their relationship cite finances as the number one reason — easily beating out the second place contender: annoying habits, according to a study by SunTrust. Money issues are also responsible for 22% of all divorces, making it the third leading cause, according to the Institute for Divorce Financial Analysis.” (Woods, July 2015)
My husband and I don’t agree on money priorities. Confession: My husband and I don’t agree on how to spend money. I’ll spend money on the kids and house all day long. He wants to save for trips, retirement and a good nest egg. Every person will have some different priorities. We meet together to discuss where we are at with each of these priorities.
-Plan. First step in any budget is to sit down and make a plan. In order to get both people to stick to a budget, they both need to help with the plan. Understand and listen to the other person’s want and needs. They might say they don’t want to live on a budget or they want you to take care of it. It is so important to figure out what is important to each of you. Help your spouse understand the why of your financial goals. Listen to the why of their financial goals, also. Forget the past. Don’t bring up how much money they spent yesterday, last week or last year. You are both starting now.
-Prioritize. Decide which priorities are most important to you as a couple. One wants to save and one wants to buy a new car this year. Focusing on one priority at a time will help you see results more quickly. Make sure you are listening and agree that the priorities you set, you both want to achieve. After focusing on one area you will see results and then you can decide to stick with that priority or move on to another one.
-Evaluate. Make a way to track your priorities. I have a simple Excel chart that shows how much in debt we paid off last year. My husband likes to see a visual since numbers on a page don’t mean that much to him. Discuss at least once a month where you are both struggling to meet the budget categories that you set up.
-Flexibility. Always allow for flexibility in your budget. Evaluate together what you could do differently to adjust those categories or discuss ways to save in that area. Make sure you have a sufficient amount in your discretionary budget that is yours to spend on whatever you want. My husband often saves his up until he has enough to buy something bigger. I usually find something to buy with mine by the end of the week.
The first step in establishing a budget with your partner is to listen. Then, you can plan, prioritize, evaluate and improve flexibility together. Set aside time to have regular, uninterrupted conversations about your budget. Even after you have established a budget, leave blame and shame out of the conversation. If you start with the first step, listening, your joint efforts will combine, your priorities will shift towards each other, and your relationship will be strengthened.
Woods, Jennifer Ryan. 10 Ways to Prevent Money from Ruining Your Marriage. July 6, 2015. Forbes Magazine.
My system of “No Crash Budgets” teaches you about interest, debt, savings and planning for emergencies while still living the lifestyle you want to live. My system is adaptable and flexible to you and your wants and needs. It allows you to still get your wants.
Saving money is a lot like losing weight or getting healthy. I advocate for a system of saving money and getting your finances in order that is sustainable unlike a “crash budget”.
As always, I offer tax and budgeting advice for free. Contact me through my website. You can also follow me on Instagram at nocrashbudgets
Government Shutdown carries on but I.R.S. will be open for tax season.
The government shutdown carries on. But, the I.R.S. will still open tax filing season on January 28th. I heard news stories that refunds wouldn’t be issued until the shutdown ends. But, the government has decided that amidst the shutdown we need the I.R.S. at work.
So, get your taxes done early.
It’s the weekend. Make a plan for getting your finances in order this year.
Contact me to set up a free budget consultation.
Eat healthier, get more exercise and save more money all tied as most popular resolutions of 2018, according to statista.com. This is not a surprise. These are all very popular goals every year. Saving money is an important skill that you need to learn for yourself. So, let’s apply the acronym of S.M.A.R.T. to reaching your financial goals.
Now, is the time to reassess your goals. New Year’s Resolutions are often too vague to actually be a goal. So, it’s time to take your resolution, reassess and change it into a S.M.A.R.T. goal that you can actually achieve. Good luck this year.
Please contact me to set up a budgeting phone call and get your finances in order this year.
The first step in making a budget is to see where you are spending your money. When you track expenses regularly, you might be surprised at where you spend your money. I spend my money differently than you. A set budget doesn’t work for everyone. You need to have the flexibility if you want to make it work.
I have an excel spreadsheet to track expenses and balance my checkbook regularly. But, I decided to try the free apps on my iPad and see which one I liked best. Here’s a review of the pros and cons to each app that I tried.
Checkbook. This is my favorite and the one I’m currently using. Pros: it is easy to set up categories, fun pictures for categories which makes it easy to see at a glance, easy to add transactions, recurring payments. Cons: if you put in the wrong date, it can be very difficult to find the transaction. Also, I don’t like that you need to go into the detail of the transaction to enter it but you can’t mark it as cleared until you’re on the main screen. This one has a lot of manual entry.
Mint: Pros: Most of the work is done for you once you set up your accounts. It will track your expenses. I like the reports. I like the e-mails when I reach a goal. And, I like the credit report tracking. Cons: I like to look through each category and make sure that my expenses are in the right categories. For instance, I buy my gas at Costco but I like to keep the amount separate from what I spend inside the store. So, I need to go into Mint and move transactions around. You also can’t put in the transactions before they clear your bank. You can put in a budget for each area and then once it clears the bank, it will take the money out of that bucket for the month. For some people, that might be a pro. I haven’t used it enough in that way.
Every time I get paid, I spend the money by entering transactions into Checkbook that day. I use my accounts more like the envelope system. But, I don’t like to carry cash or pay with cash all the time. So, by entering the transactions when I get paid, and spending all my money, I know where all of my money is going for the week because I get paid every week. I give myself $40 a week to eat out. This includes fast food, lunches, and date night. When the money is gone, I don’t spend anymore money on eating out that week. If I have some left over from the previous week, it gets added into this week’s amount.
Tracking expenses is an important part of setting up and maintaining a budget that works for you. You probably looked at my $40 a week to eat out and thought that’s way too much or that’s way too little. You get to decide what that number is for you and then stick to it.
If you can’t stick to the budget in an area, you need to look at which budget you can make smaller so that you have more room in this budget. If you can’t stick to the budget, what good is it doing you? Reevaluate your budgets on a regular basis.
Are your finances completely out of control? Are you spending more money every month?
Savings. You should have at least one month of income saved to your savings account. It is important to plan ahead for emergencies. The first step to being able to get your finances in control is to plan ahead for emergencies. When you have things come up, it is so much easier if you have a plan and a savings fund. While you’re building your savings account, make sure you are staying current on your credit payments.
Debt. Now, that you have some money put aside for emergencies, you can shift your focus to your debt. You are going to pick one debt to work on a time. Then, you will use the snowball method to pay off your debt sooner. To pick your first debt, you can choose the smallest balance or the largest interest rate. Most people say it is best to start with the largest interest rate. But, if you start the smallest balance, you can see your effort sooner. So, I prefer to start with the smallest. Hopefully, you have a small debt that you can pay off within a few months. Then, you take the payment you were making to this debt and add it on to your next debt. Make a simple spreadsheet in google sheets to see your efforts.
Retirement. Retirement savings is very important. The sooner you start putting money away for retirement, the more money you will accumulate in your retirement account. However, if you’re spending more money than you are currently making, retirement savings is not the smartest route for you. Get a good savings account started and pay off a lot of your debt, then start saving for retirement.
Staying focused on one of these areas is the very best way to get control of your finances. Once you start to have control in one of these areas, be proud of yourself. Even if you’re not where you want to be, you are still doing great by staying focused and achieving one goal.
I always compare it to losing weight. One area is like ten pounds. You can’t expect to lose fifty pounds in a month. In the same way, you can’t expect to turn your finances around in a week. It takes long, focused effort to lose weight and control finances.
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