Projecting Like a Pro

Look Into Your Crystal Ball: Before you can budget, you need to understand well enough to project.Finances, finances, finances. Unless you've got a trust fund and/or a parent who can't bear the idea of you ever thinking of such ugly things, they're a day to day part of your life. From managing your debt to planning for retirement to monitoring your monthly bills, it can either be a well-orchestrated plan or the very bane of your existence - and, let me tell you, the latter is way less fun. So how do you develop a budget that can run your life that you can actually live with? Well, this kind of thing takes time - but we're building you a toolbox to get things going!

My feeling on the whole financial planning thing is that it should always be approached from a business perspective. I mean, there are always a gazillion emotional issues tied to to money - that's why it's one of the primary fights that couples end up driving each other bananas over. How to resolve the fact that you're a saver and your partner is a spender? How to resolve the fact that you believe that a few lunches out a week are necessary to your social life but your spouse is a bagged-lunch type? To be completely fair, nothing on earth will make those differences go away, but you can do your best to think about the equation as a family business decision. You need to commit yourself from removing emotions (as a team - without both partners' buy-in, you're asking for trouble) from the picture.

As such, Hitched! is going to be running a series on managing your money like a business. We think it's just the thing to figure out how to plan for both childcare payments and nights out with the girls without killing each other (or yourself).

Time for a Cheque Up: What goes out must come in.You can't start to really understand your financial situation without a list of your current inputs and outputs, so this phase will be all about putting it together. We Hitched! girls like to put together spreadsheets, so we've got a starter to help you get going. (Please feel free to revise and modify as required for your family.) The important thing here is not to set yourself up as a master budgeteer, running parades where dollars are saved every second of every day. The first phase in determining a fair assessment of your household in- and outflows is to understand the reality. This article isn't intended to dictate what your spending should be (that'll come in future articles), but what it indeed is. In my mind, you need a healthy three months of watching your behaviour as compared to what you think it is in order to understand what on earth you should be modifying to improve your overall situation. No, Miss Moneybags, this won't be happening overnight.

Now that we've covered the basics, let's get started.

The inputs are obvious, so open up the excel and type 'em in. No matter how you split up your income and bill-paying, it really does help to make a joint household budget, so be sure to include your paycheque, your partner's paycheque, predictable self-employment income, and any other fun money that happens to consistently come your way on a monthly basis.

When you're thinking about your inputs, don't go all pie-in-the-sky with fantasies of 25% raises in six months or whatever. Accountants will always tell you that projections should be ultra-conservative. Why? Well, if in six months, you are surprised with that pie-in-the-sky raise, it's just extra cash-money that you can play around with at that time. But if you've planned for it in your projections and you don't get it, your cash flow can be all out of whack.