On July 18, I married my husband, James Perkins. In three short months, we have learned how to set up and use a monthly budget with the goal of being a zero-debt household. James is a full-time student and we are supported by my small income and his part-time job. We built into our budget the things that are most important to us: paying off my $5,000 student loans, putting $1,000 into my Roth IRA, and eating well. Our budget is not perfect, and we continue to tweak it each month to improve. We use the following guidelines to make it better.
We recommend doing these together. Actually, it’s a must. Perhaps one of you is better with the actual logistics, but you need to work through this as a team. Otherwise one is the rule-maker/enforcer and the other ends up feeling excluded or helpless with expenses. We started with Dave Ramsey’s online budget calculator and made changes for our needs, but there are other budgeting tools that can help you too.
1. Have a “Pre-Budget” Month
We got married in July and in August we documented every little expense. I was surprised to see how much we spent on meals out of the home. A date night is intentional but a $5 footlong is an “oops, I forgot my lunch” expense. It adds up quickly! We looked at what we spent, where we spent too much and then began to calculate what we would need to spend in the future.
2. Document All Expenses
Some expenses, like gas station coffee, feel insignificant, and may even be cheap as a one-off purchase, but not if you do it several times a week. For example, James gets a medium coffee at Race Trac for $1.34 — not bad. If he did this three times a week it would be $4.02, and then $16.08 each month. Or, he can drink coffee at home for about 30 cents a cup and we can spend the difference (about $12) on drinks on date night, or the perfect fall scarf I wanted…
When you document your expenses, you think twice about adding the soda to your meal, or paying to have something shipped rather than buying it at the store. Also, you know that your spouse will hold you accountable when you look at receipts.
3. Stay on Budget
Being careful each month will help you keep track of your overall yearly budget. Have categories that fit you. For example, we spend a lot on gas to commute to work and school, but little on clothes. You may be really into rock climbing or small brew beer crafting, and if this is your bonding hobby together, consider how it will affect your expenses.
It begins to be satisfying after a few months. We were under budget in our first month. With this “extra” money we didn’t go out and spend it all, but instead put it toward savings for an anniversary trip.
4. Be Honest With Each Other
It kind of stinks to realize what you actually spend versus what you think you spend. There were some expenses that James had that I didn’t think were necessary and vice versa. We discussed them and made decisions together. It is tempting to conceal what you spend on, or justify why you spent it. However, honesty at the beginning of marriage – and throughout – is crucial for your happiness together.
5. Be Realistic
If you can’t afford it, you can’t afford it. For example, we had to eliminate our CrossFit membership together, and that was a tough decision. I knew we had to do it though when we were trying to squeeze it between our entertainment and health savings categories, justifying a way to fit it in. We want to come back to it in the future, but in the meantime we are finding new ways to be fit without a gym membership.
You NEED food. You LIKE beer. Differentiate between luxuries and necessities. We spend money on luxuries nearer to the end of the month if we have the money. For example, I really wanted new running shoes this month but we just don’t have the money. So I’ll wait.
7. Budget for Healthcare
You’re young. You’re fit. You haven’t had the flu in five years. Great, but prepare for the rainy day. No matter what your insurance (or lack thereof) provides you, set aside money for these expenses. In our three months of marriage, we have only had one $40 co-pay. Our monthly budget sets aside $80/month for healthcare. It’s likely that we will go several months without needing to touch this, but that when we do, it’ll be a bigger expense. And we will be prepared for it.
8. Anticipate Future Needs
Some months will cost more than others. The season of gift-giving and driving to see friends and family is right around the corner. We saved some of our wedding gift cards to ease the burden of affording Christmas gifts this season. Anticipate how your needs will increase or decrease. Some circumstances might be a new car, car repairs, changing rent, adding a cable package, adding your spouse to your cellphone plan, etc.
You will feel less of the “squeeze” if you plan for it in advance.
9. Check Your Progress Twice a Month
Add things up midway through the month and check again at the end. Some months you’ll be slightly over, but some you’ll be under. Gaining control over your money at the beginning of marriage is extremely important – if you spend like you’re single, the money may end up controlling you.
Finally, as you combine your financial lives, it’s also very important to know where you both stand with your credit. That means pulling your credit reports regularly (you can get them for free once a year from AnnualCreditReport.com), as well as your credit scores (which you can get for free on Credit.com). If you have problems with your credit and need to build it, now’s the time to start so that you both have good credit when you need it down the road.
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