Where Did All MY Money Go?!
Budgeting! Everyone has (had) a problem with it to some extent. For the majority of us, our paycheck is insufficient for us to save any of it OR we have enough yet frequent moments of weakness find us in a place where at the end of various pay periods we are still looking for all the money. Where Did It All Go?!!! Those of you reading this are fortunate in that you are seeking an end to the madness. At some point, you must know that there is light at the end of this forsaken tunnel! It will require your dedication, focus and the sharing of this information with others… just because I asked and said please… PLEASE! =D
Okay! Let’s start at the beginning! Budgeting and/or saving first begin with a decision to do so and that, more often than not, is coupled with a goal. The founding point of the budget we develop here will be a goal that you set for yourself! Think on all of the many things you want in life. Things for yourself. Things for your child(ren). You want one of those emergency funds that you keep hearing about, and you want to travel internationally, not just for the first time but during the first of spring every year!!! Great! Now that you have your mind sufficiently distracted with things, go ahead and list them out! Why not?! This list will be a good reminder of what it is you are working toward. During those weak moments that will come, at least initially, you’ll want to remind yourself of why exactly you’re doing this in the first place. Fittingly, we’ll go ahead and call this your List of Why—Why are you doing it? Go a little deeper and include things like education for you and your family. Include extracurricular activities and any notable purchases you’ll be required to make in the future.
Taking this process into consideration, let’s note that budgeting isn’t always about what you have to do. A good portion of it is often dedicated to the things we want to do. Sometimes, our desires are equally, if not more, motivating than our needs. As you embark on this life-changing journey, I urge you to also begin prioritizing your needs over your wants as this focus assists greatly in our becoming the most responsible and accountable savers we can be.
Enough of the things you don’t want to hear! The meat and potatoes of it all is that you want suggestions on how to save–How exactly do people do it?!!
For starters, you’re going to have to create a budget! This does not have to be anything formal although a formal and well thought out budget will be more in line with being ultimately successful in this endeavor. For those of you who have limited funds already, you will definitely want to create a budget. Before you can save anything, you need to know where everything is going! What can be modified? What cannot? What is recurring on a monthly basis and what is occasional yet happens often enough to warrant inclusion? What must you do? What would you like to do? Each of these needs to be pondered. Perhaps, this sounds difficult to you? It does not have to be! Start your list out with the following…
Budget On Demand:
- Housing – should be a third of your take home pay / 30-35%
- Utilities
- Auto/Transportation – 20%
- Gas
- Insurance
- Commuting/Parking Charges and Fees
- Bills Remaining
- Debts/Loans – 10%
- Food – 15%
- Groceries
- Eating Out
- Entertainment
- Travel
- Miscellaneous
- Savings!!! 10% (or more)
You can modify this listing of suggestions to add more detail if you’d like. Additional detail will help you drill down to the specifics and will also help you to clearly see what is required vs. what is optional. When doing this, exact figures work best, especially in the cases of non-negotiable budgetary lines. For any flexible recurring items, set aside the MAX amount that regularly occurs for that season. For example, heating costs increase in colder months while entertainment and travel allowances will typically increase for families during summer months when children are out of school. Guiding percentages have been included to fit general allotments. Be sure that your budget lines up as closely to these as possible OR less, except for the savings area where you’ll obviously want MORE!!!
Don’t be afraid to make amends to your budget as needed. Budgets may be flexible whereas savings goals should not be as fluid. A suggestion would be to visit your budget each season to allow for changes in spending based on life changes. Savings goals should be reviewed each year namely because of the dictate that this process will teach you to work on your… sticktoitiveness, and yes!—That is a word in websters!!! If you’re modifying your goals each season, you may not have given the goals proper time to take hold and be effective. For this reason, you’ll want to be sure that your starting goals are both realistic, accurate, precise and measurable. Even if life changes bring about challenges that press your ability to continue saving the same amount, resist the urge to change the savings goals and work on making modifications to other areas that will allow for flexibility. Areas such as entertainment, food and miscellaneous are easily adjusted as our lives change.
Additional Resources:
- Easy and Quick Budget Calculator :
http://mappingyourfuture.org/money/budgetcalculator.htm - Excellent breakdown of how to manage your spending according to the 50/30/20 rule!
http://money.msn.com/how-to-budget/how-much-should-you-spend-on-weston.aspx - Details on how to get out of debt in 5 steps. You’ll also find a budget worksheet and chart provided via one of Oprah’s friends! Good Luck and Enjoy!
http://www.oprah.com/money/Oprahs-Debt-Diet-Step-5/1 - Build-a-Budget Worksheet and Tips :
http://frugalliving.about.com/od/moneymanagement/a/Budget_Form.htm - 10 Steps to Making a Financial Budget :
http://money.cnn.com/magazines/moneymag/money101/lesson2/
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