For Greater Financial Constancy, Get A Budget Binder Prepared

Also see: [Debt Reduction] and [Budgeting]

    If you want to get your finances in order, the first step is to prepare and maintain a budget.  One of the best ways to start is to set up a Budget Binder where you can store the information to make your budget work.  In it you can keep income records, your master and monthly budget, receipts, a calculator, and expense records.

    Purchase or find a sturdy 8-1/2" x 11" binder.  Purchase or find ten or more binder dividers.  Get a simple handheld calculator. 

    Label the dividers:  Budget Information (simple notes of your income sources, the amounts, and time of month when you can expect to be paid), Practice Budget (your preliminary attempts to get your budget set up), Master Budget (your final, master plan for spending your money), Monthly Budget (actual month to month budgeting records), Bank Statements (there many several dividers here, one for each kind of account you have), and Expense Records (bills and receipts).  You may also keep other, important financial information in this binder.

    As you get your finances in order, keeping written track of what money comes in and how you are spending your money for three months.  This is your practice budget.  As each month ends, note where you overspent and where you actually had money left over.  Makes adjustments in your budget for the new month and try again.  By the end of three months, most families have a pretty good idea of their fixed expenses (those expenses which are paid every month - rent or house payment, utilities, fuel, and groceries, etc.), their occasional expenses (expenses which need to be saved for but aren't taken from the budget every month- property taxes, car insurance, etc.) and variable expenses (those unexpected expenses of an unknown amount - car repair, tire replacement, children's education, etc.)

    Let each spouse have a small amount of cash to spend each month without having to account for its use.  However, also have a spending creed.  This is an agreement between the spouses as to how financial decisions will be made.  One family's money creed might state:  "We can spend up to $25.00 individually without consulting each other.  We will walk away from the store and think carefully before we spend between $25.00-100.00 on an unplanned opportunities (i.e. something you want when you see it but haven't saved for in the budget).  We will sleep overnight on any financial decision over $100.00 and try to do our homework so that all our expenditures are the best investments we can make."  Having such a written spending creed will save many a conflict.

    After you have settled into a budget routine, it is time to set up your Master Budget.  This is a formalized itemization of how you plan to spend your money over the next year.  It accounts for all know potential income, all known fixed expenses and has provision for saving money for upcoming occasional and variable expenses.  In other words, you spend your money on paper first.  Then you spend it for real.

    The Monthly Budget is the actual working budget.  Using your Master Budget, prepare budget sheets for your needs (or if you are computer literate, set up the budget there).  Designate one spouse to be in charge of depositing the checks, paying the bills, and maintaining the budget month to month.  This same person prepares the monthly budget summary.  Have a formal meeting together at least once a month to review how you did, what you want to change, where you failed, and how you will do better.

    Getting your finances in order and maintaining a monthly budget does wonders towards long-term financial security.  Know where you are and how you are doing, have some long-term goals and use a money creed.  Everything helps.  It takes time and trouble to keep up a budget, but it is the fastest and best way to financial success.  Good luck!  It is worth it.    

    For more detailed information and printed master and monthly budget worksheets, see Chapter 13, "Finances", in "House of Order" Handbook.  Return to Budgeting...