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Money Q&A: Creating and Sticking to a Budget

Q.

How do we create and stick to a budget?

A.

For starters, you’re spending for two now, not one. This means your budget will have to take into account someone else’s needs as well. To build a budget that works, you have to keep monthly tabs on yourself. Go to TheNest.com/budgeter. List your fixed monthly expenses; then find out your monthly and annual disposable income. In this process you may realize that some of your so-called fixed expenses (such as 1,000 cell phone minutes) aren’t actually a necessity.

Next, decide how much of your disposable income should go toward savings. It’s impossible to give a standard “percentage of income,” as this is a personal decision. But you can get started by deciding what you’re actually saving for: a college education, a down payment, retirement, and so on. (To get an idea of these amounts, use the retirement calculator at ChooseToSave.org/ballpark.) Play around with the numbers and figure out how long it will take to reach a predetermined amount if you save anywhere between 5 and 20 percent. Also, have about three to six months of expenses covered should one or both of you lose a job. Finally, and hopefully, you’ll have some money left over for vacations and personal items. Whether you combine it or split it in half, each of you should vow to stick to your limits.

-- The Nest Editors

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