Establishing A Budget

Do you ever wonder where your money goes each month? Does it seem like you’re never able to get ahead? If so, you may want to establish a budget to help you keep track of how you spend your money and help you reach your financial goals.

Examine your financial goals Before you establish a budget, you should examine your financial goals. Start by making a list of your short-term goals (e.g., new car, vacation) and your long-term goals (e.g., your child’s college education, retirement). Next, ask yourself: How important is it for me to achieve this goal? How much will I need to save? Armed with a clear picture of your goals, you can work toward establishing a budget that can help you reach them.

Identify your current monthly income and expenses To develop a budget that is appropriate for your lifestyle, you’ll need to identify your current monthly income and expenses. You can jot the information down with a pen and paper, or you can use one of the many software programs available that are designed specifically for this purpose. Start by adding up all of your income. In addition to your regular salary and wages, be sure to include other types of income, such as dividends, interest, and child support. Next, add up all of your expenses. To see where you have a choice in your spending, it helps to divide them into two categories: fixed expenses (e.g., housing, food, clothing, transportation) and discretionary expenses (e.g., entertainment, vacations, hobbies). You’ll also want to make sure that you have identified any out-of-pattern expenses, such as holiday gifts, car maintenance, home repair, and so on. To make sure that you’re not forgetting anything, it may help to look through canceled checks, credit card bills, and other receipts from the past year. Finally, as you list your expenses, it is important to remember your financial goals. Whenever possible, treat your goals as expenses and contribute toward them regularly.

 Evaluate your budget Once you’ve added up all of your income and expenses, compare the two totals. To get ahead, you should be spending less than you earn. If this is the case, you’re on the right track, and you need to look at how well you use your extra income. If you find yourself spending more than you earn, you’ll need to make some adjustments. Look at your expenses closely and cut down on your discretionary spending. And remember, if you do find yourself coming up short, don’t worry! All it will take is some determination and a little self-discipline, and you’ll eventually get it right.

Monitor your budget You’ll need to monitor your budget periodically and make changes when necessary. But keep in mind that you don’t have to keep track of every penny that you spend. In fact, the less record keeping you have to do, the easier it will be to stick to your budget. Above all, be flexible. Any budget that is too rigid is likely to fail. So be prepared for the unexpected (e.g., leaky roof, failed car transmission).

Attached is a template of the budget format that I use. The first tab can be used as an estimation of your budget and give you an idea of the many expenses you could encounter throughout the month. The second tab is where you need to examine, identify, evaluate and monitor your personal monthly budget.

 Download A “Personal Monthly Budget” Template

This article was provided by 360 Financial Literacy

 Until the next article, continue to plan and stay committed to your plan.

 CJ

Aspects of Your Financial Health

Your Financial Health is an important aspect of your life in general and should be reviewed at every major decision or at least annually. Here are many different aspects of your Financial Health:

• Setting priorities
• Making a budget
• Understanding banking and saving
• Filing your taxes
• Health insurance
• Planning for retirement
• Investing in stocks, mutual funds and bonds
• Contributing to your 401(k)s
• Employee stock options
• Controlling debt
• Buying a car
• Auto insurance
• Life insurance
• Saving for college
• Kids and money
• Asset allocation
• Buying a house
• Home insurance
• Estate planning
• Hiring financial help

Taking the time to adequately research, plan and commit to these aspects provides for a prosperous Financial Health!

Until the next article, continue to plan and stay committed to your plan.

CJ

Financial Prosperity takes Planning and Commitment

In life, there are many things that we embark upon. Every mission we take on is usually to educationally enrich ourselves or for personal pleasure. Most people tend to approach every mission with the mentality of “planning as I go,” which in limited cases is the best decision. On the other hand, there are many more people who approach every mission without a plan and the results ultimately tend to be failure.

Planning and commitment are inseparable when it comes to achieving your goals. You can’t have planning and no commitment to finishing and you can’t have commitment to something you haven’t fully planned. Planning is a clear and detailed analysis of the task including the objective, mission and goal. Commitment is the internal aspect of planning that oneself has to communicate with oneself as to whether this is something you want to do. Without planning & commitment, your setting yourself up for possible failure.

Your finances may just be one of the top 3 aspects of your life that planning & commitment is a necessity. Many financial decisions will occur throughout our lives, including paying for college, buying a new car, living on your own, saving for retirement, and buying a house. These major financial decisions are only achievable if you plan and commit to them.

There are many aspects of your finances that you need to plan & commit to, including monthly bills, saving for retirement, emergency fund, and what many college students dread upon graduating, paying back student loans. All of these financial aspects and others, you will either succeed or fail at them, but it depends on how much effort you put forth into planning & commitment.

Until the next article, continue to plan and stay committed to your plan.

CJ