Why? Because a budget is the only way to make sure that all of your money is working for you in the best way possible. And, it's really the path to peace with yourself, your finances, and your spouse, because if you don't have control of your money, you really don't have control of your future.
Josh and I recently shared our personal journey in setting up our own budget, and what you need to do to set up a budget for your family, on episode 2 of our podcast If Life Were Perfect. You can click here to listen to the budgeting episode, then be sure to follow these steps below.
Quickstep for Budgeting:
Know the 3 key numbers to get ahead.
What it is:
Determining what you make, what you have, and what you owe.
Why you need this:
Many people fight over money or feel stressed about their finances. It's hard to get ahead when you feel like you are barely getting by. Setting up a budget is the key to taking control of your finances, and getting in control of your future. The starting point for every budget is knowing what you make, what you have, and what you owe, and then setting up a budget.
15 minutes - 1 hour
How to do it:
1. Determine your monthly income (include your wages and income from any other income streams). This is what you make.
2. Determine what you have (your bank account balance(s) + investments + asset values of cars, homes, retirement accounts + the value of any other assets you have).
3. Determine what you owe (credit card balance, mortgage, student loans, car payments, and other payments).
Knowing these numbers is an important first step for setting up a budget. An easy way to set up a budget is to remember that a budget is the path to P.E.A.C.E.:
P: Print all your financial statements
E: Earn, owe, and have (know these numbers)
A: Assign a grade (how is this payment, expense, asset, etc. working for you)
C: Chop and change (chop out discretionary purchases/expenses and change necessary purchases/expenses to get for less.)
E: Eliminate payments (anything you bring in excess of your new costs goes toward paying off debt.)
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You can also talk with your Newport Beach, California estate planning attorneys at the Meier Law Firm anytime for help setting up your budget and for all of your estate planningand financial needs. We have a great team here at the firm, and awesome partners in the financial planning space who can help you set up a budget and take control of your future.