Budgets

When it comes to “Budgets”, most people cringe! So, let’s not call it a budge, perhaps we call it our “essentials” The goal here is to keep your monthly expenses below your monthly take home pay… Let’s keep it that simple to start…

Attached in the FREE download section is link to a worksheet to get a handle on your monthly expenses and a column for your “extras.” Extras are all those little things, that seem to add up to so much at the end of the month! You know… The coffees, the extra stuff at the store when you went in for one thing… I get it sometimes those shoes just call to us!!! While going through this exercise don’t forget to look at some of the bigger items like insurance bills. Is the car paid off and maybe that needs to be re-addressed. Did you really cancel that $300 a year XM Radio account, and did it go through? Ya the little things that sneak in there…

If you use an online banking app. look under “bill pay” or in the search box for spending habits, for a spend history and this will help you fill in the worksheet.

The worksheet is an exercise, to help get a clearer picture of “where” the money is going. Once you have an idea of where you can make cuts, be aware of this when making a purchase. Finding ANY extra money each month is a starting point, and by sticking with it, you build momentum! This develops GOOD habits.

The next step is how to allocate the funds each month.

FIRST pay yourself! Then all the bills/obligations, THEN if there is money left you can spend some of that, heck, spend 1/2 of it if you want! The habit we are trying to get in is being more aware of where the money goes each month and to prioritize saving and obligating first (In that order) Then the slush fund…

PAY YOURSELF FIRST: What does this really mean??? Each month you first fund the below essential accounts.

1. The emergency fund account! No this is not for the shoes…. 🙂

An emergency fund account has 3-6 months of your monthly expenses saved, that is there for “an emergency.” Such as” You lose your job, the roof is leaking, you need four new tires… IF you tap into the emergency funds, you need to replenish it as part of your ongoing plan.

2) Some type of long-term savings/investment account.

This is an account such as a work 401K, or a ROTH IRA. The 401K will help lower your taxable income and grow with compound interest. The ROTH IRA is money you fund after taxes that also grows with compound interest. Think of a ROTH like a savings account with special powers!

Thats a budget in a nutshell!

* Download the FREE ” WHAT DO ALL THESE TERMS Mean Anyway?” List under FREE STUFF that covers the basics on retirement and investment accounts.

*As you work on finding more “extra” money in your budget over time, maybe a raise, or new job, and you start more “saving & investing”, you will be happy you did not buy the shoes!