Money Talks

No one likes to discuss money, no one…  Because we are newly married, we are just now combining our finances.  On our past car trip, I thought this would be a good time to broach the subject of a new combined budget with my dear husband.  We have enough money for our expenses, we just sometimes do not know where it is all going.

I have found if you set a budget and allocate where every dollar should go, not only do you have more money — there is a lot less stress about paying the big items. Budgeting is not hard, it is just a different mind-set.

The first budget will be the hardest.  When I first really started getting control of my money, I wrote down everything I spent.  This gave me a better idea of where my money was going.  I kept mine relatively simple so as not to overcomplicate things.  Because I get paid twice a month, I broke my budget into the beginning and end of the month and set out what payments would come out of each check.

I had kept mine relatively simple.  I keep groceries and eating out in the same category as “food”.  I did line item the specific things auto-drawn from my account, like Planet Fitness. I then went to a cash-based system for many items.  For instance, I do cash for restaurants, groceries, some charity, and the hair salon. I don’t do cash for gas, because it is much easier to pay the pump.  I use my debit card as a credit card for gas.  When I lived alone, I also had utilities and rent.

Since we had started living together, my way of thinking has gone a little by the wayside and our dollars seem to be just flitting away, not really sure where they are going. So with a lot of discussion, here is what we are going to do going forward.

First thing I did was put the dollar amount of all of our income after taxes at the top line.  Our health insurance, my parking at work, and my retirement come out of our checks, so I don’t account for them in the budget.  I only account for the dollars we actually have coming in.  Next I listed out all of our bills.  If you are struggling right now, the first priority is making sure you have food and a place to live with utilities. Here is how we plan to do it with our May budget:

• Groceries and eating out have a set amount.  We are going to put this amount in cash and put it in an envelope, a jar, wherever for safekeeping.  Now when we go to the grocery or dinner, the cash will come out.  When we run out of cash, we can’t buy anything else.
• Utilities will be what we expect for the next month.  Some months the gas is high because of heat, some months the electric is high because of air conditioning.  If the swings are too great, you may want to check with your local utility company.  Many offer budget billing.  This is where the bill for the past 12 months is averaged to one set amount each month.
• We will continue to pay for gas using the debit card.  I have a big commute and the price of gas see-saws so much, so I do try to over-budget (within $50 for this).
• We set aside a certain amount each month for giving.  I keep some in cash and some in the checking account.
• I am going to go back to putting my hair/beauty in an envelope — pulling it out as a I need.  As a Princess this keeps me under control.
• There will still be specific recurring monthly line items, such as Planet Fitness, car payment.
• Our individual spending money will be in cash.  Once it is gone, same as groceries — it’s gone. Big spending items need to be discussed ahead of time and planned for.  Both of us have had full control of our own money for a long time, so this will probably be the hardest adjustment.
• The next thing I am going to do is to start setting aside a monthly amount for larger items such as car and homeowners insurance, yearly taxes and car maintenance.  I also set aide gift money for my kids this way.  Christmas should not be a surprise, it does come the same time every year.
• Now with whatever money we have left over, we are going to put towards our car debt.  Over the last year, I have paid off all other debt I had and this is my last one.

I have a checking account that allows you to have “reserve” money.  It is really nice because you can set the total amount you will need and each month as you put money aside for it, you can put it in this category.  Mine puts it in a reserve, so although it is part of my checking account it takes it out of my checking account balance so I am not tempted to spend it.  If you don’t have this type of account, you can also track these items on a spreadsheet.  Now when it comes time for that big bill, I can just reallocate it back to my checking account and pay the bill.  No more worries about how to come up with that big line item.

To make this really work, if you have a spouse — you need them on board.  Right now, I am going to put the budget together.  We are going to meet, agree on what is in the budget.  At first, we will likely have a budget meeting once a week until we get this right.  I expect in a month or two, our meetings will go to twice a month.  Good luck!