Guest Post: Linda Leitz and Making a Budget

Linda Leitz, author of We Need to Talk: Money and Kids After Divorce, has been answering some personal finance questions from readers lately. Today is a look at the third installment:

Q. I want to make a family budget, but am unsure of how to begin. What should I do to get started?

Linda offers this answer:

First, figure out what you spend now.  Ideally go through at least six months of checking account and credit card records.  If you have one of the computer programs that can track spending, it’ll be easy to download all your accounts, then categorize what each item is.  Be sure you look at what you charge on your credit cards.  Don’t just assume a credit card payment is, well, a credit card payment.  What did you charge it for?  Clothes?  Eating out?  Gas?  Groceries?  If you’re paying down a credit card balance, that can be considered a debt payment – which you should attack with as much zeal as you can muster.  But the individual charges you make need to be categorized with that spending category.

Then look at what you have little immediate control over – housing, utilities – and put those in as fixed items.  Then look at what you have more control over – eating out, entertainment, vacations – and decide what you want to spend on those.  If you’re having trouble making ends meet with adjustments to these discretionary items, don’t be afraid to consider changes to the “fixed” items.  Adjust your thermostat or look for less expensive housing.

And don’t forget to be willing to attack the other side of a budget – how much comes in.  If you’re underpaid, be willing to look for a job that brings in more.

Linda Leitz is a certified financial planner. You can find her online at www.lindaleitz.com.