Quickstep: Create a monthly budget.
What it is: A complete understanding of what you make, what you need, what you want, and what you spend money on so your family can enjoy life while building financial independence.
Why you need this: Only 40% of families have a working monthly budget. Without having a budget, families tend to spend money on unnecessary expenses, incur debt, and cannot build financial independence. It can also hurt your marriage and overall security. By having a budget, you can enjoy more fun, less stress, and more overall financial and emotional security.
How to do it: Follow these 12 Steps to create a family budget:
- Decide to start a budget. This is surprisingly the hardest step.
- Know how much you have. Tally up all your accounts, (including interest rates or expenses).
- Know how much you make. If you do not have a set income, use the average monthly income based on the last 6 months.
- Know what you owe. Credit cards, mortgages, student loans, and any other debt you have.
- Determine your financial net worth. Just subtract what you owe from what you have.
- Determine your average recurring monthly expenses. Cell phone bill, life insurance, utility bills, preschool, nanny, and any other monthly expense you have.
For the full 12 steps and expanded guidance for each step, click here.