Budgeting: It’s Not A Dirty Word!
People don’t plan to fail they fail to plan.
I was told that those who do know their history are prone to repeat it, so let’s look at what is happening our us.
– Fortune.com, “American’s Savings Rate Hit Great Recession-Era Lows,”
– May 27, 2022
– TheStreet.com, “Seventy-Five Percent of Americans Don’t Think They Can Save Enough to Retire,” – May 24, 2022
– CNBC.com, “Nearly Half of All Americans Expect to Retire in Debt, Survey Says,”
– November 16, 2021
– Reuters.com, “U.S. Household Debt Tops $16 Trillion Amid Rising Inflation,” – August 2, 2022
Why Create a Budget?
There are 4 main reasons to get a budget in place for this upcoming 2023,
• To get a grip on your spending
• To save for retirement or a special purchase
• To know exactly where your hard-earned money goes each month
• To avoid the debt trap
A journey of a thousand miles starts with the first step, but a step in the wrong direction will completely change the detitanation. You should start by Find Out Where the Money Should Go; In an ideal budget, your monthly income should be divided into five main categories of spending:
• Housing and Debt Living Expenses
• Taxes
• Insurance
• Savings and Investments
You can’t really know where you are going until you know where you have been, so gather the information you need to get started. Do you know how much money is coming in and how much is going out? Typically, this can be a real eye-opener for most people.
Here’s how to get started:
Gather every financial statement you have
• (Bank statements, investment accounts, recent utility bills, etc.)
Note all your sources of income
• (salary, child support/alimony, pension, Social Security, CPP/QPP, rental income, dividends, etc.)
Create a list of monthly expenses
• (mortgage/rent, car payment, auto and health insurance, groceries, utilities, entertainment, college/university savings … everything you spend money on)
Now that you know where you are, you can determine where your money goes. Jimmy Dean Once said,
“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.”
So, we cannot change what has happened but we can take corrective action to change our families’ financial future.
Now that you’ve created a budget, make sure you review that budget monthly to make sure you’re staying on track. Take a few minutes to compare your actual monthly expenses with what you created in your budget. This will show you the areas in which you did well and those you may need to improve.
By: David Pinzón