One of the most important things any person has to understand to get the financial monkey off their back the concept of money in and money out. You need to run your household like a small business and realize that you are a business that will either thrive or fail. The choice is yours and yours alone. The people that suffer if you are failing are your most cherished and loved ones, so the gorilla is huge on you.
You first must know how much money is coming into your household. This must include paychecks, birthday money, alimony, child support, and welfare of any kind and keep up with it. I put all my money in one checking account to start the month so I can see it all there. I also put any left over money from the following month into my emergency fund, so I’m only looking at my money in for the month. I then make a written budget of where all the money in is going.
This is the money out part of the plan. We pay ourselves first in our retirement accounts, savings accounts, college funds, etc. Then we pay our bills such as our mortgage, electricity, insurances, taxes, and lastly we put money into our other expenses such as birthdays, kids sports, or vacations. Then we look again and if there is money left we can move it into savings. We always write this out on a legal pad and if we don’t know the expense, we over estimate it such as with gasoline prices. If it is $200 a month we will put $250 toward it in case prices go up. This is why we usually have some money left over at the end of the month for a family dinner out or a splurge for a Slip n Slide from Wal-Mart.
Also, notice I use the term “we” because my wife and I both sit down and do this together because we must work together like any good business partnership. We work for a common goal. If one of use fails then the family fails. We also put all our money together because it is easier to keep up with it together. We are not separate in anyway financially. My money is our money and her money is our money. We both hate bills and try to keep as much of our money as possible to build a productive business. We discuss major purchases together, in the beginning to was anything over $20, but as we made more money and got our bills under control it is anything over $100 must be discussed. I did ask if I could buy an NES classic mini for $60, and got an OK because again, it is our money for our small business we are growing together. Most of the time if we discuss it, we don’t buy it, because we realize it is not a good splurge.
You have to know what is coming in and what is coming out for any business to work and you must look at your finances every week to make sure the company budget is working and if it needs adjustments. If you find too much is coming out and you are failing then you must either stop spending or find more money to come in. Those are the only options. Sometimes, driving for Uber one night a week or canceling a second rarely used cell phone can save your small business from failure. If you don’t know where your money is track it and get your business back on track.