Friday, October 20, 2006
For What It's Worth: Family Budgets
It is a source of friction in nearly every family. The weekend arrives and the over-spending begins. But you can turn that financial stress into marital bliss. 7 News' financial expert Ken Wurtenberg says "For What It's Worth," sit down and create a budget.
WSVN -- A big family means big expenses. No one knows that better than the Martinez family.
With 9-year old Amber, 7-year old Madison and 16-month old Irelynn, parents Joyce and Manny have found out how quickly the money can disappear!
Joyce Martinez: "We didn't expect a third child, and we thought we were really on the right track and in the right direction. Obviously, we were blessed with her, but that made us think again."
But 7 News' financial expert Ken Wurtenberg says it doesn't matter how much money you make. Every family should sit down and come up with a budget.
Ken Wurtenberg "Whatever income bracket you're in -- the lower, middle, or upper -- it really doesn't matter. It's important for us to sit down and plan with it."
The first step: Identify and write down your financial goals.
Include saving for college, buying a new car, going on vacation and planning for retirement.
Then step two: Break each financial goal down into several short-term goals.
Ken Wurtenberg: "You have a short-term financial plan which is generally less than 12 months. There's an intermediary planning from one to three years, and then long term goals from five years on."
Just remember to budget for two types of expenses: Indiscretionary, which you can't control, and discretionary, which you can.
Ken Wurtenberg: "Your mortgage payment is pretty much in cement. You need to pay it, otherwise you lose your home or rent. Now with your telephone bill, you can control how much money you spend on the telephone."
This is why step three is critical: Expect the unexpected.
Keep money stashed away for not only emergencies but unforseen activites and expenses.
Ken Wurtenberg: "The best financial safety net is to have at least 6 months of household expenditures saved somewhere for these unexpected events."
And finally, step four: Evaluate your progress to determine if your budget is working or if you need to make changes.
Ken Wurtenberg: "What you're doing is controlling your expenses and not allowing your expenses to control you."
The Martinez's are working hard to take control. Not only have they budgeted their expenses, but they're also trying to earn extra income by investing in real estate.
Ken Wurtenberg: "You've got to get very creative, even for activities -- personal activities. It's a lot more difficult for us with three children to make sure you have to multiply that out."
Keep in mind that there are good software programs available to help get you started, such as Quicken or Microsoft Money. Another option is to hire a financial advisor to help create a budget that works for you and your family.
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