Published on May 25, 2022
The word "budget" has been misunderstood for far too long.
Too many hear that word and immediately think it means "restricting" or "doing without." But it doesn't have to.
In fact, it you think of a personal budget as a tool to monitor your spending as you work toward financial goals, you realize that it's really a positive word.
Budgeting is a good practice no matter the financial climate, but especially important now. Too often, you just don’t realize where your money is going.
For instance: A stop at a coffee shop a couple times a week; a family meal at a local restaurant because you don’t feel like cooking; and a night out on the town. Pretty soon, you’ve spent the same as you do for your car payment ̶ and you didn’t even realize it.
Budgets can be easier than you think.
Make sure you budget some money to enjoy your life. You don’t want to deprive yourself. Much like the biggest reason diets fail, your budget will go by the wayside if you’re not happy and feeling fulfilled while doing it.
Let’s use the popular 50-30-20 budget to get you started. You can decide later if 70-20-10 or 80-20 suits your lifestyle better.
Step No. 1 is determining your after-tax monthly income. Got it?
Now let’s set up a budget to see where that money will go.
That means everything you need to live:
Other necessities may include utilities, gas, clothing, and minimum loan payments (credit cards).
Leave yourself some wiggle room for gas and food.
Prices are expected to keep rising.
Make sure you’re distinguishing between a want and a need.
Other wants may include brand new items to replace something you already own. If you're honest with yourself, there's nothing wrong with your current smartphone (and you certainly don't need new golf clubs every year).
Subscriptions such as Amazon and Netflix are wants,
though they seem like needs to some.
20% Savings and Debt
Dedicate the final slice of your budget to preparing for the future (and eliminating some of the past).
Revisit your budget as your life changes. Did you get a raise? The additional money doesn’t automatically go into the “Wants” bucket. Make sure you divide it up.
Need help with the math? Get started here:
Give it a try. You’ll be surprised when you see just where your money is going. If you’d like some advice, give us a call at 877.243.2528 and we’ll be happy to help.