Intro to Budgeting

I left off yesterday with some very bad predictions that had to do with suffocating around Christmas time. I apologize that was probably harsh, but still true.

Budgeting is not just for people with who are making less than xyz. Budgeting makes good sense for all people regardless of their income or potential for income. I like to amuse myself with creating budgets for the day when I have a larger pool of money to work with. I am that geeky.

I understand why some people don't want to budget. I really do. But ignoring the facts doesn't make them go away. I like to know what I am working with. I like details. I like numbers. I like making projections. I like making charts and graphs and spreadsheets. That is just me. You can make your budget complex and detailed (like mine), or you can do one simply and generally. Whatever method you will USE is the one you should choose!

The primary goal of a budget is to identify what sources of income you have coming in and what expenditures you have going out on a monthly basis. Simple.

If it is so simple why don't you it?

• It takes up too much time
• I don't have enough money to budget
• I don't know how
• I don't want to know, it is depressing

Let me give you some (more) sobering news:

"The American Bar Association has indicated that 89 percent of all divorces can be traced to quarrels and accusations over money. Others have estimated that 75 percent of all divorces result from clashes over finances. Some professional counselors indicate that four out of five families are strapped with serious money problems."

"Marriage tragedies are not caused simply by a lack of money, but rather by the mismanagement of personal finances... Peace, contentment, love, security in the home are not possible when financial anxieties and bickerings prevail."

Being married to an intern/resident comes with its own set of stressors, I don't need any additional stress in my life or my marriage. A budget could save you from many sleepless nights, unnecessary arguments about spending, and can help you identify things that are important to you and your spouse.

Budgeting is a family affair. In our household, I am responsible for the budget. I create it, I track it, I monitor it. My husband fully supports my efforts and doesn't attempt to thwart my plans very often. It took some time to get us both on the same page. He is at the hospital working all day, he isn't paying the bills or doing the shopping. In his mind it seems like he is making enough and why are we always so tight. A budget keeps the entire family in check, up to date, and on the same page when it comes to how you will spend money.

I recognize that if you have a spouse or a significant other that doesn't share your same view of money and budgeting this process can be difficult. Money can be an emotional subject to talk about. I can remember one conversation in which my husband felt like I was suggesting he wasn't providing adequately for his family. He also from time to time gets upset that he can't "reward" himself with something seemingly small for his hard work and long hours. I have also felt trapped by our budget at times. Retail therapy is a close second to chocolate. Chocolate usually wins because it is more budget friendly. But abandoning it has never been a consideration. We have fallen off the wagon at times, but the majority of the time it works and we know where our money goes.

Our budget has protected us from making poor choices. Our commitment to not make purchases on our credit card that cannot be paid off immediately have made us accountable to living on what his income provides. Trust me, had we not made that decision we would easily have tens of thousands of dollars in debt that we could not "assign" to any one purchase. It would have been dinners out, movie tickets, weekend trips, clothing, groceries, etc.

It is easy to justify taking on more debt because the amount of debt we carry from medical school is hefty! What difference does another ten thousand dollars make when your totals are already nearing the $300,000 mark and beyond? It does matter. Those bills have to be paid. Shuffling money from one place to another and playing games so as not to get behind is not a reality I can live with.

Another argument we might make to justify additional debt is that we will be making more than enough money to pay it off in the next 3-7 years. While that may be true, spending money you don't currently have is one of the behaviors that lead to the economic crisis we are still living in. Not to be Debbie Downer, but what if that day never comes? Hopefully tragedy will not strike, but what if it does? We can't continue to borrow our future earnings.

I realize this is just my own personal belief. I understand that every situation is different and that the line I draw in the sand for my family about personal debt is rather black and white. For me it is easier to deal with that then dealing with gray areas, because eventually everything can become gray.

Next: How To Set Up A Budget