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Book I: Taking Charge of Your Finances
Tackling a Budget Deficit
If the "Your Bottom Line" number on your worksheet (see Table 3-1) is
negative, you've got a budget deficit. You may be making up the difference
between your total monthly income and your total monthly spending by
using credit cards, getting credit card advances, borrowing money, writ-
ing hot checks, paying bills late, or not paying bills at all. Stop doing those
things! They're only driving you deeper into debt.
Cutting expenses
Deal with your budget shortfall instead by reducing your spending. Review
your budget, looking for expenses you can trim or eliminate. Focus first on
your discretionary spending because those are nonessential items. You'll find
most of your discretionary spending items in the "Variable Spending" cat-
egory on your worksheet; however, some of your fixed and periodic spending
items may also be discretionary. For example, cable TV is not an essential
expense. Likewise, you may be able to find a cheaper Internet provider (or
go to the library when you need the Internet) and cancel some of your
memberships.
Making budgeting a family affair
Developing a budget and making it work is
something that you and your spouse or part-
ner should do together. After all, you're both
spending your family's money. It's a good
idea to involve your kids in the process, too.
Sit down as a family and talk about why your
family needs to live on a budget and what bud-
geting involves. Show your kids the income and
expense worksheets you fill out as you work
your way through the budgeting process. Share
your current income and spending figures with
them, let them know how much less your family
needs to spend each month, and ask your kids
for budget-cutting ideas, including things they
are willing to give up. Also discuss any budget
cuts you plan to make that will directly affect
them.
At the end of each month, sit down as a family
and compare your budgeted spending to your
actual spending. Celebrate if your family's
spending is in line with its budget by doing
something inexpensive together -- maybe
ice-cream cones for all or a picnic in the park.
When your comparison shows that your family
spent more than was budgeted, talk about why
you went over budget and what all of you can
do to ensure that it doesn't happen again. When
your children feel like an important part of your
family's financial team and understand that you
value their input, they will be more apt to pull
with you, not against you. They'll also be less
apt to resent changes that may affect them.
