6 Steps To Creating A Long-Term Budget, Marriage Or Not
For LGBT couples, modern families and society in general, history is being made rapidly. After state after state legally approved marriage equality, the Supreme Court voted to make same-sex marriage a right nationwide.
“The progress we’ve made as a community and as a society has been amazing, but now a major question looms for many LGBT couples: to marry or not to marry?” says financial professional Holly Hanson, founder and principal of Harmony Financial Strategies (www.harmony-financial.com), a firm that focuses in comfort for all families, including those from the LGBT community.
“Financially speaking, there are a number of benefits to be gained from marriage, including gifting, spousal IRAs, filing tax returns as married and more. But there are still issues, such as efforts by many states to overturn the ruling,” says Hanson, who also is author of the book “The LGBT and Modern Family Money Manual.”
Whether couples decide to marry or not, one financial dynamic will always be essential, and that is a capacity to budget life expenses in a shared life, she says.
To that end, Hanson summarizes six steps to creating a budget.
- Laying it all out
Decide to view the budgeting process as something not to be feared, but rather one in which you can be educated. By embracing your circumstances and truly knowing what you’re working with, you have a better idea of what you can improve and what you can control—and also what you can’t. Start by accounting for everything. Notice what’s necessary, what’s optional, as well as good debt versus bad debt.
- Track expenses
Know your spending habits. Be realistic and honest, because most of the time we underestimate our spending. To get a complete view of your spending habits, track three months of spending. An expense worksheet may prove helpful.
- Track income
This is especially helpful for those with irregular income. Ultimately, you may need to examine how you can increase your income, be it through petitioning for raises, switching jobs, changing investments to income-producing or adding supplementary income.
- Set SMART(ER) Goals
This may be a handy mnemonic device – SMART (Specific, Measurable, Attainable, Realistic and Timely), or add “ER,” which means Evaluation and Re-evaluation. Rather than fuzzy “someday” hopes, these acronyms may prove helpful in setting and pursuing goals.
Financial goals can be highly individualized, so whether one person in a relationship wants to save for a family trip to Europe or to fund their future child’s college tuition, write it all down. Seeing the goals on the page will help you prioritize what’s the most important.
- Put the budget into practice
A spreadsheet of some kind is needed both to launch and track a budget. Do not get hung up on pennies; round up to the nearest dollar. Whether or not you’re off by a few bucks, the idea is simple – to get an overall picture of what you have to work with. From there, you can make informed decisions.