One of the most important monthly rituals in my house is making a budget.  My wife and I sit down somewhere between the 10^th and 15^th of the month in order to determine how much we can spend in the coming month and how we will build our life.  I personally prefer to make a budget from the 15^th to the 14^th of the next month, because by that point I know how much money I already received from my primary source of income (by Israel law, employees must be paid no later than the 10^th).

It is important that both the husband and wife work together to agree on this budget.  This does not mean the wife just lets the husband do what he wants and she agrees; she must be part of it.  I have heard plenty of couples who financial problems start with the fact that one spouse controls all the money.

Making a budget means assigning an address to every shekel you earn, telling it to do before it tells you.  In order to do this you need to determine two things:  your inflow of money and your outflow of money

inflow:

Include any money you have received in the past month.  This includes any money you earn, your spouse earns, and any money you receive as a gift.  For example

As you can see, we’re dealing with only ₪5,400.  No more.  There is no spending anything above this without going into savings, or even worse, debt.  If you need more, then realize what you will have to do, and consider how you will need to pay it back.

 The next thing is to list our outflows of money.  I prefer to list them by order of flexibility.  For example, I cannot change the amount I pay for rent, but I can change how much I eat out.  Obviously your list will vary.  It may even vary every month; that’s fine.  The important thing is that every dollar you have has an address.

 Finally, fill in the amounts starting from the least flexible to the most

Your inflow must equal your outflow.  Every shekel you make has to have an address.  If you get some extra money during the month, you can either choose to add it to your current month (add the money to you inflow and outflow) or save it for the next, but do not do what most people do and spend it both times.

A wise woman once told me that every budget is a fiction; it’s just a matter of how historical your novel is.  If you see that something is not working in your budget, or that you are going to have to break a limit on something, then call an emergency budget meeting with your spouse where you both determine what you will have to change in order to ensure that your inflow still equals your outflow of money.

I personally keep an excel file on the desktop of my computer than will automatically subtract any money I type in and tell me how much I have left.  Some people I know like to keep a countdown of how much thay have left to spend in each catagory on the fridge.  The important thing is to be aware.  Once you have a budget, you’ll be surprised how much more easygoing you’ll be about spending money.  No more guiltly meals out and regretful splurges.  Next time you go out, you’ll kow that it is exactly what you can and should be doing with your money.