When first starting a family, not very many couples or families sit down and discuss starting a budget plan. Talking about finances can be challenging for a lot of households. After all, studies show that money is a primary cause of dissatisfaction in marriage and family relationships. Surveys show that out of couples who separate, 85 to 90 percent say that the number one issue they were having was finance issues. Our team of financial experts came up with some simple tips to help you kickstart your family finances and get organized…
The first thing that a couple should do is individually write down their own personal financial goals, get together and discuss those goals. Come up with a plan together and make sure that it satisfies where you both want to be. If discussing finances openly isn’t made a priority in the beginning, down the road you might have to deal with unnecessary tension.
Creating your Budget
As long as you and your partner work together and are on the same page when it comes to finances, creating a budget is easy. Here are a few basic steps to keep in mind and let guide you:
- Set goals
- Calculate your income and expenses
- Analyze spending
Setting goals goes back to communicating with your partner or family. Where do you want to end up financially and what’s the best way to get there? That’s where keeping track of income and expenses comes in. Knowing what you have coming in, as well as going out is imperative if you plan on reaching your financial goals. Keeping a momentum of your monthly income and knowing what your expenses are is important. Expenses fall into three different categories:
- Fixed committed expenses
- Discretionary expenses
- Variable committed expenses
Mortgage, rent, car payments, health insurance etc. are considered fixed monthly expenses Variable expenses are items such as groceries and gas that would vary from month to month and are based on need. Discretionary expenses are things that you don’t necessarily need to spend money on but they give you a sense of attainment in life. Often these expenses are considered as luxury or entertainment. For example, going to the movies, dining out a few nights a week or paying for a gym membership.
Budgeting should be one of the most important topics in any household. Having a foundation for financial goals, as well as a clear budget plan can set you and your family up for success for years to come. But why should you budget? Here are some benefits…
- Budgeting can help you to live comfortably.
- When starting to budget, your priorities will become clearer, ultimately maximizing your finances.
- Monetary issues is often one of the biggest causes of stress. Take control over your financial situation and see how less stressed out you are.
- Recognize needs versus wants. When you start to see the numbers and make sense of the flow of income and expenses, you will see what you need in order to live comfortably versus those purchases and expenses that will ultimately set you back.
Do you communicate with your spouse about finances? Did you sit together and create a budget plan? If you plan on expanding your family in the future or just want to live comfortably, these are all important topics to think about. If you need help coming up with a family budget plan, don’t be afraid to ask for help. Our finance professionals here at Bodine Perry are here to help you and your family reach your financial goals. Call us at (855) 851-8318 or visit bodineperry.com.