Chapter 3: Building a Budget
There are key elements to managing money as a couple. You need them to build the framework and from there you could make adjustments to customize your budget.
We talk about the basics of building a budget in the video above. Once you've taken a look, download the Money Management for Couples Worksheet to help make decisions.
Get to know your expenses.
Three types of expenses help you create a budget: fixed, variable, and non-monthly. Look over your bills and payments to help you identify and categorize your expenses.
Fixed expenses are set amounts you owe every month. Think car payments and rent or mortgage.
Variable expenses cover non-set spending amounts like groceries, gas, or even personal spending. To calculate an amount for variable expenses in your budget, figure out the average of your last three months of spending. That should get you close, but monitor it and make any necessary adjustments to keep your budget sound.
Non-monthly expenses are set payments that are due multiple times a year—think of taxes or license plate renewals.
You may see the future, if you think about it.
Plan for your non-monthly expenses by estimating the amount you need and divide it by the number of months you have to save. Write this amount into your monthly budget and put the money aside so you have what you need when the payment is due.
Fight the temptation to put this off or take from it for immediate needs. Non-monthly expenses could creep up on you if you're not prepared, leaving you in an unnecessary lurch when the payment is due.
Emergency Funds help you feel like a champ.
When it rains, it pours. Chances are, you know what it's like to have one expensive thing hit you right after another. As you organize your money, set some aside for when those unexpected events turn up.
Emergency Funds could prevent you from using a credit card or tapping into a line of credit. And, when you get the chance to pay off an expense you didn't plan for, it feels great. In moments like these, you really appreciate the effort and discipline you put into your budget.
Your Chapter 3 Checklist:
- Watch the Building a Budget video
- Download the Money Management for Couples Worksheet
- Identify your expenses and start an emergency fund