Basic money management is not a class for students in high school or college but should be. Many families find themselves in debt facing a financial crisis hiding in their future if the don’t follow the tips and advice of managing money which could be found in a high school course.

For example take a fictitious couple of Marty and Diane Average in their mid 40’s who think they budget well – but can’t seem to get ahead. They want to get serious about getting their financial future in shape to enjoy retirement.

Where does Diane and Marty start?

The first question to ask this couple – Do you have a completely developed budget?

A budget is the first step to “Mastering the Basics of Money Management”

Most people understand a budget as being key. They start with good intentions on their budget but somehow always get off the program or things don’t work perfectly and they lose interest. A budget needs to be reviewed on a regular basis – like every month!

Marty and Diane are like so many families across America who do not understand the budgeting process.  Developing a balanced budget, building an emergency fund and saving all need to be a part of mastering their money.

Let’s look a little deeper at this couple. Marty and Diane’s children are grown and out of the house. They still help out their kids by paying a part of their kid’s student loans.

Their joint annual income is $45,000. As for retirement they have some money in Diane’s 401(k) but Marty cashed his 401(k) in when he recently changed jobs. He cashed it to pay bills.

Basically in their mid 40’s they are starting all over again. Before they can start to save for the future they need to get a budget in place and both work on controlling spending.

Diane and Marty in error, honestly think that since they pay all of their bills – they have a balanced budget.  Beyond the bills which arrive every month in the mailbox they have not taken into account, car expenses or repairs, maintenance around the house, clothes, personal items, entertainment and any other irregular expenses.
 A fully functioning budget will include all of those items.

With a house payment of $775 and a monthly car payment on the SUV of $685, the car payment is not much different than their house. The monthly auto bill is way out of line.
Throw in the growing cost of fuel and auto insurance the combined expenses chew up about 1/3 of their monthly take-home pay.

Even Diane knows that’s way too much.

Their monthly budget suffers from omissionitis.

Without looking at all your expenses you’ll never know the true expense of running your home and living each month or what you are truly spending.

At the moment Marty and Diane’s money is ruling them. They are not ruling “Mastering” their money!

Some consumers want to run and hide or get made when anyone brings up the B-word (budget) because they only think budgets will restrict their freedom. The truth is a clearly defined, fully expensed budget actually liberates the spending.

The budget is a spending plan for your money and gives those who follow a budget a way to turn their fiscal situation around and begin to build a nest egg for the future.

Going the route of a debt consolidation loan may help some but without proper discipline the debts will return shortly. Countless time I’ve seen debt consolidation loans provide an element of relief and a sense of “accomplishment” in handling the money management issue. Working through the debt process of paying each debt off individually usually helps create and teach better money handling principals.

Fortunately, Marty and Diane decided to work together to get on track with their finances. They started to take the biggest steps of managing their money – they started developing a complete budget of their spending, building an emergency fund and begin to save.

Are you next to take back your life that money controls? Start a budget today!