Goals For Cash

This year the typical American household will have somewhere around $50,000 run through their bank account. Most will look up in December and wonder where it went. Don’t let that be you. Now is the time to get organized and establish a spending plan for your income. This is better known as a budget. A budget will help you to establish the goals for your cash. You can download a basic zero based budget form here.

Before we get into the nuts and bolts of budgeting, I want to establish some ground rules that you and your family can follow.

1. Both spouses have to participate in the budget process. The person who is more numbers friendly can make the budget, but both partners must agree to the numbers
2. The spouse that did not prepare the budget must look the budget over and change a few things. This does not have to be an arguing point, it is so that both partners are participating and can agree on the spending plan. If you can not agree, the plan will fail. The most important piece of a budget is the agreement to live by the numbers on the paper.
3. Both partners can change the budget during the month if the need arises, BUT, you must agree and the budget must still BALANCE.

If some type of emergency comes up or if you begin to spend more in a certain category than planned, come back together and lower another category so that you can raise the category that needs more money.

A zero based budget is when you start with the money that comes into the house at the top of the paper. Then you spend that month on paper, before you spend it for real. The bottom of the paper should equal zero, which means that you have allocated all your money for the month. We will discuss how to fill out this form in the next blog. Get pointed in the right direction today and begin to budget, so that by the end of the year you know that your money went where it could benefit you most.

Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area.