Budget planning time

Money in May Recap

The tightrope balancing of a household budget

What a month we’ve had, discussing all of the different parts of financial organization.
Balancing the in-come and the out-go can be a tightrope but with a little planning and organization it can all come together.

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  • In-come versus Out-go: The most basic budgeting rule is to make sure that the out-go does not exceed the in-come.
  • Fixed and Flexible Expenses: Some expenses are non-negotiable such as the mortgage but many are flexible in the sense that they could be managed differently.
  • Spending Tracking: Tracking the incoming and outgoing dollars for two or three months to truly see your money is doing.
  • Debt Reduction: The key to reducing your debt for good is bit by bit. Rarely do we have a huge cash influx in order to make a big dent.
  • Saving Tracking: Having a plan goes a long way to being successful at truly saving money.
  • What are your largest expenses? Take a look at your biggest expenses first before addressing the smaller ones.
  • Where can you save money on outgoing expenses? Sometimes it isn’t about the big savings, it’s about the little ones such as a $5 coffee here or a $10 lunch out there.
  • What do you want to use that savings toward? Keep your goals in mind in order to keep yourself on track!
  • The bottomless well — The list of potential debt can be as long as a CVS receipt. It adds up one charge at a time until you’re underwater completely.
  • More than the minimum — Even if you can only afford an extra $10 per payment, it will add up.
  • Self-fulfilling cycle — The more debt you pay off, the more money you will have to put towards other debt.
  • Where will the savings come from? Even setting aside just $10 per paycheck can add up towards your savings goal.
  • What are your savings goals? Speaking of which, don’t forget to set that goal! It will help keep you on track.
  • What will keep you motivated? There really isn’t an immediate payoff to a savings goal so make sure you figure out what your true motivation is.

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Budget planning time

Money in May Part #4: Savings Tracking

Budget planning time
Savings??? How do I build up savings while I’m still working on everything else??? Let’s talk about some little ways to work on the savings account.

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Where will the savings come from?

After taking a look at your spending tracking and debt reduction plans, where do you intend to find the money to save?  Many experts will tell you to pay yourself first and it truly is an important comment that many people over look.  Savings does not always have to be large amounts like a bonus from work.  Try setting aside even $10 per paycheck into a savings account and then ignoring it.  Some might suggest the envelope method however I prefer not to keep everything in cash (personal preference only).

Some people have taken on a “side hustle” to infuse more cash into their household finances.  This is certainly an interesting approach but can work if you can still balance your home and work lives.

What are your savings goals?

What are you saving towards?  Are you trying to build a nest egg?  Go on vacation?  Fund your kids’ or grandkids’ education?  Planning for your own retirement?  I would recommend building a nest egg first even as you are reducing your debt.  Any available funds could be split between debt payoff and savings.  Having that cushion of savings does go a long way to reducing financial stress in a household.  When the unexpected costs of life rear up, having that savings available makes it quick and easy to address instead of having to add to the credit card balance.

What will keep you motivated?

It can be difficult to stay motivated in regards to savings.  There is rarely an immediate payoff to achieving this financial goal, plus it is lifelong.  There is no “end”.  So how will you stay motivated?  I suggest focusing on what you can accomplish – giving your children a debt-free education, enjoying that family cruise, or being able to live comfortably in retirement.  Those life goals are much more motivating than simply skipping the morning latte.

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