We have met people from all walks of life … from the very wealthy to those who have a large amount of debt. And yet we’re still surprised at how many people have no idea how much money they make or how much money they spend on a monthly basis. Why? We believe it’s because many people have negative thoughts when they hear the term “budget”.
Some people can get anxiety when thinking about creating a budget and, as a result, push it off to a later date. We believe the truth is that creating a budget can actually enhance our lives! Patrice Washington stated in a Forbes interview, “Budgeting is not about deprivation at all … They [budgets] give more to us because they give us a better sense of what we have on hand to spend and how we can plan for the future.”
It is important to know what your cash flow looks like and have a positive outlook when creating a budget, including when you are doing this with a partner. One way to get a positive perspective around creating a budget is to think about the potential positive outcomes from creating your budget. Think about the clarity you might gain regarding your spending habits. Think about the ways in which you might be able to improve the outflow of your money. Think about how you would feel if you were able to see that you have more money coming in than going out and you are saving for things that are important to you. Talk about all the benefits with your partner.
How should you create a budget? Everyone is different, so you must find a method that works well for you. There are many ways to create and track your budget. Some people create budgets by listing fixed expenses in a binder or writing bill due dates on a calendar. More recently, people have started to use personal finance tools on their phones and/or computers. Nerdwallet.com has an article that suggests different types of personal finance software. Whatever you do, choose a budgeting system that works best for you. And you can always ask your financial planner for suggestions and tools as well.
Once you have created a budget you love and are aware of how much money you are making and spending, we believe it is much easier to get a handle on your financial situation.
References and Further Reading
McGrath, M. (2015). Why You’re Thinking About Budget All Wrong. Retrieved from https://www.forbes.com/sites/maggiemcgrath/2015/05/22/why-youre-thinking-about-your-budget-all-wrong/#5fc194c82332 Schwahn, L. (2019). How to Choose the Best Personal Finance Software. Retrieved from https://www.nerdwallet.com/blog/finance/the-best-personal-finance-software-of-2017/