The Newlywed s Guide. To Budgeting

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1 The Newlywed s Guide To Budgeting How to create and manage a budget for your new life together. Congratulations! Whether you re about to be married or have been married for a few years now, I m glad that you re taking the time to improve the way you and your spouse handle money. Quick Guide As you ll find in your marriage, a good relationship is built on a strong foundation of communication, honesty, and understanding. The same foundation can also be applied to managing your finances wisely. The core to wise financial management is a budget that takes into account these three principles. As you ll explore in this guide, maintaining a budget is fundamental for couples who want to manage their finances effectively. I m confident that you ll be equipped with the resources you need to start your marriage off with a budget that works. Commit to budgeting with you spouse and you ll set your marriage up for financial success in the years to come! Part 1 Part 2 Part 3 Part 4 It Starts Before The Wedding Setting Your Marriage Up For Success Creating Your First Family Budget Worksheets and Resources He who finds a wife finds what is good and receives favor from the LORD. Proverbs 18:22

2 It Starts Before The Wedding For those who haven t tied the knot yet, I m glad you found this guide early! You may not have a clue what to expect when it comes to marriage and money, and that s ok! There s a lot to know and these budgeting tips will help you as well as those who have been married for years. Getting comfortable talking about your finances should start before the wedding. It s important to set financial expectations and goals together, both of which can be done before you re married. Open conversations about spending habits, debt obligations, and savings goals should be discussed prior to the wedding. The last thing you want to do is start off your marriage with a big surprise and financial burden that you ve tried to hide. What Questions Should You Ask? If you re already thinking about marriage, you probably have somewhat of a good idea about your future spouse s financial picture. But somewhat isn t good enough here. You need to know the cold hard facts before you commit to the rest of your life with this person. How much debt do you owe? What is your credit score? Do you keep a budget? Don t settle for round about answers and don t hold anything back. Both of you need to be open about spending habits, debt, income and other goals. If you re seriously thinking about getting married, you need to seriously answer these questions about money. How much do you save? How much do you give? Through wisdom a house is built, and by understanding it is established; and by knowledge the rooms shall be filled with all precious and pleasant riches.. Proverbs 24: 3-4

3 Set Up Your Marriage For Success According to TheKnot.com, a recent survey found the average cost of a wedding to cost $27,800. While your wedding day is certainly one of the most important days of your life, you need to make sure you don t set yourself up for financial failure from the start. Going into debt to get married isn t a good idea. Regardless of who is paying for the wedding bill, it s smart to use a budget to plan for the wedding. See part four for sample wedding budgets and resources to help you plan. According to MSN Money, only 40% of people use a budget.. The Budget: Your Key To Financial Success How can anyone expect to get ahead financially if they aren t tracking where their dollars are going today? With so many online tools, budgeting spreadsheets, and workbooks out today, it s simple to find budgeting resources, but surprising how many people do not actually maintain a budget. According to MSN Money, only 40% of people use a budget to track their expenses. That means a lot of people aren t actively tracking their dollars and planning for monthly expenses. The next section outlines the steps that you can take to start your budget. Actually maintaining a budget is simple taking that first step and deciding to do it is the tough part. These tips will equip you to: Track your spending Organize your expenses Control variable budget items Conduct monthly reviews Set and meet financial goals Automate your budget Communicate effectively about money

4 Creating Your First Family Budget Your budget is simply a way for you to track your income and expenses. It shouldn t feel like a ball and chain. Yes, it s designed to place restrictions on where your money goes, but it also gives you the freedom to spend your money in the areas that you ve budgeted for. The first step in starting your family budget is to gather all your expenses and write down all forms of income. I know it sounds simple, but your goal here is for your expenses to be lower than your income (groundbreaking, right?). Unfortunately, Americans haven t fully grasped this concept as the average family holds over $5,000 in credit card debt a sign that we are a nation of spenders using more money than we make! Quick Visual for Income and Expenses INCOME EXPENSES Regular Monthly Income Regular Monthly Expenses $ $ Irregular Side Income Annual Expenses 12 = $ $ TOTAL INCOME: $ TOTAL EXPENSES - $ Your goal here is to obviously have a positive number after you ve subtracted your expenses from your income. If it was negative, you re not alone. The good news is that with a budget, you can start to track were your money is going get on track to spending less than you earn. Quick Tips While this financial exercise seems simple, it may take some time to actually see what your income/ expense total amounts to. This is especially true if you don t already keep track of your expense. In order to quickly account for your income and expense, take note of these tips: Gather bank statements to see direct deposit of income and also for expenses. Use credit card statements to add up any bills or expenses paid that month. While you re looking at each expense, take a few minutes to write down when they come due. This will help you stay organized and make your budget flow better.

5 Controlling The Expenses Gather your banking and credit card statements for the last few months and start to look through each expense. You should see a few common categories appear, e.g., groceries, gas, and entertainment. Make a note next to each line item on the statement indicating which category the expense would fit, or create a column of categories and write in the expense to keep it even more organized. Example: Category: Groceries Mortgage Auto Expenses Entertainment Eating Out $147 $700 $57 $22 $17 $202 $200 $7 $4.50 Setting Category Limits Once you know where your money has been going you can see what needs to be changed. This is where trial and error will come into play because you won t master your budget the first time around. Compare what you have been spending in each category to the suggested average for budgeting. You may be way off in certain categories - like eating out for example. This is a relatively easy fix since you can physically stop going to restaurants and force yourself to eat at home. Other areas like your mortgage, auto payment, phone bill those are more difficult to reign in, but not impossible if you re open to making sacrifices. Suggested Category Limits Based on Percentage of Net Income Charity 10% - 15% Retirement Savings 5% - 10% Mortgage/Rent 25% - 35% Food 5% - 15% Utilities 5% - 10% Phone, Internet, Cable Transportation 10% - 15% Medical/Health 5% - 10% Clothing/Personal 5% - 10% Recreation/Entertainment 5% - 15% Debt 5% - 10% Student loan, credit cards

6 The Newlywed s Guide To Budgeting Budgeting Worksheets and Resources Included is a sample worksheet that can be printed and used for those who like to have a tangible item to keep on track. For excel spreadsheets made available especially for you check out this exclusive page on Faith and Finance: Tools Include: Wedding Budget, Household Budget and Debt Reduction Worksheet Online Budgeting Tools Mint.com Mint is one of the best online budgeting tool available today. It s completely free and syncs to your bank accounts to track your income and expenses automatically for you. It even connects with your credit cards, investments, mortgage, and student loan debt and has a goals feature that can keep you motivated to save more and pay down debt. My wife and I have been using Mint.com since 2008 and have found it to make our monthly money discussions much easier to make. Mvelopes If you re familiar with the envelope system of budgeting (that is, you set aside physical cash into an envelope for each budget category and use only those dollars throughout the month), Mvelopes is for you. It s an online version of using envelopes and provides you the tools you need to give your dollars a home each month. It automatically categorizes your paycheck into online envelopes that will be drawn from as you pay for expenses each month. Mvelopes is a paid service that many have found to be tremendously helpful. Reading Resources

7 ()*+',!-%./01'', Monthly Expense Budget Actual Monthly Expense Budget Actual Deductions Personal & Health Savings $ $ Clothing $ $ Other $ $ Toiletries & Care Products $ $ Haircuts $ $ Housing Gym & Sport Club Dues $ $ Rent or Mortgage $ $ Health, Life, etc. Insurance $ $ Utilities $ $ Doctor & Dentist Visits $ $ Home Insurance & Taxes $ $ Prescription & OTC Drugs $ $ Other: $ $ Other: $ $ Debt Payment Entertainment Credit Card Payments $ $ Tickets for Shows & Games $ $ Other Loans: $ $ Books & Magazine subscr. $ $ Food DVDs, CDs, Video Games $ $ Groceries $ $ Other: $ $ Eating Out $ $ Coffee $ $ Miscellaneous Other: $ $ Charity, Gifts & Offerings $ $ Transportation Pet Supplies & Vet $ $ Car Payment $ $ Entertaining Guests $ $ Car Insurance + Taxes $ $ Cash not Accounted for $ $ Car Maintenance $ $ Other: $ $ Gas $ $ Public Transit, Parking $ $ Other: $ $ Summary Calculation Family Monthly Net!"#$%&' $ $ Day Care & Babysitting $ $ - Expenses Total $ $ Other $ $ $ $

8 Thank You! For more resources on personal finance, visit