Does your money not stretch as far as it used to? (Having kids can do that.) You know what you're supposed to do: Create a budget. But if you fear that doing so will squeeze the joy out of life, it's time to switch your mind-set. "A budget is actually a spending plan that gives you financial freedom," says Ellie Kay, author of Living Rich for Less. Taking control of your finances will mean fewer debts, less stress about overdue bills, and fewer money arguments with your partner. Sound more appealing now? Read on.
Add up your income. List your and your partner's net
earnings -- the actual amount you see every month after taxes on your paychecks or direct-deposit transactions -- by using the free budgeting programs at Mint.com or BudgetTracker.com. Factor in any freelance and interest income as well as any alimony or child-support payments you receive.
Estimate expenses. Review your bank-account and credit-card statements for the past three months, suggests Stephany Kirkpatrick, CFP, and vice president of operations and financial advice for LearnVest.com. Then list all your recurring costs -- rent or mortgage, groceries, gas, child care, eating out, entertainment, and so forth. Don't forget to create separate categories for debt (such as from credit cards and student and car loans).
Balance your budget. It's time to plug in projected monthly dollar amounts for each expense category. Total them up to calculate your spending plan. "This is your reality check -- like stepping on the scale at the beginning of a diet to determine your starting weight," says Kay. If your budget exceeds your income, it's tough-love time. You'll need to make achievable reductions in your spending until your expenses match or fall below your income. Include a bucket for savings ($20 a month will do for starters). Also be sure to work in a little "fun" money for date nights and family outings -- even if you have to trim back somewhere else.
Check in regularly. Log on to your budgeting program and review it at least every other week. Confirm that your transactions (from your linked bank and credit-card accounts) are being funneled to the correct categories. Also look at your online bank and credit-card statements to see how you're doing.
Schedule twice-monthly meetings. Budgeting isn't a set-it-and-forget-it process. Once you've entered your spending plan, review it with your partner mid-month: Is there enough left in each area for the remainder of the cycle? If not, make adjustments. At the end of the month, analyze what went right and wrong. Did you eat out too much? You may need to increase your allowance in that area and cut back somewhere else. Are there any special events (weddings, baby showers) coming up to factor in to your expenses? Plan accordingly.
Make gradual tweaks. Exceeding spending limits is common for budgeting newbies. To get back on track, Kay suggests cutting spending in one area at a time. Try easing your transportation costs by shopping for new car insurance one month. Then focus on trimming your supermarket bills the next by shopping for sales items and utilizing money-saving sites like CouponMom.com and CouponSherpa.com.
Get help. If you're struggling with your budget, Kay suggests reaching out to another mom who seems to handle money well and asking for tips. You can also look into classes like Dave Ramsey's Financial Peace University and consumer-education websites such as SmartAboutMoney.org and AmericaSaves.org. If you're drowning in debt and considering bankruptcy, go to the National Foundation for Credit Counseling website, nfcc.org, and search for a low-fee credit counselor (the typical cost is around $25 per month). She may be able to negotiate reduced payments with creditors.
Pat yourself on the back. Sticking to a spending plan takes perseverance, so congrats. You're well on your way to becoming more confident and competent about your finances. "Knowing what you can and can't spend may help you avoid guilty moments and stay focused on your money goals," says Kirkpatrick.