When my husband and I got married over 18 years ago, we had no idea of how to manage our money. Even though we both worked, we always had a hard time paying our bills and had nothing to show for our money. Then my son came along and changed all of that; I wanted to be a stay-at-home mom.
We also wanted to travel, save for retirement and college funds, and purchase our own home. We knew we had to start managing our money better to be able to do these things and the first step was to prepare a budget.
- Write your financial goals on the top of a piece of paper. This will help you stay on track and motivate you to stick to your budget.
- Make a list of necessities such as rent, utilities, phone, vehicle expense and food and the amounts paid for each of them per month.
- List credit card bills with the minimum monthly payments and ‘miscellaneous’ for items such as clothing or birthdays.
When listing your budget amounts, be sure to be accurate and honest about how much you spend on them. Turn back in your chequebook and add it all up.
If you write down less than what you actually spend, how can you possibly cut back?
Once we made our list, we saw that we could probably cut back the amount we spent on food by using coupons, shopping sales and discount stores, so we lowered the amount we originally budgeted. We saw that we could probably cut back the amount we spent on petrol by making fewer trips to the store, only driving when absolutely necessary, etc.
So we lowered that amount also. We vowed to cut back on our power usage by switching off the lights when leaving a room and drying clothes on the line instead of using the tumble drier. We stuck to these amounts and I was able to quit my job to be a stay-at-home mom.
At first we didn’t have any money left after paying for necessities but that was alright because we had a roof over our heads and I was able to stay home and raise our son. As my husband got raises and eventually started his own business, we began to have a little extra money left after our budget was paid. This enabled us to go out once in a while and add a new category onto our budget called ‘savings’ where we strive to save for vacations, home improvement, retirement funds, etc.
Within a few years, we were able to purchase our own house, remodel it a little at a time, reduce our credit card bills, buy a nice car and go on holiday occasionally.