Just say the word with me – budget. It almost sounds like a curse word. I admit, on occasion I’ve muttered a few expressive words when working on a budget. I know we have checkbooks (paper or electronic), what do we need a budget for?
- It’s a planning tool. Your budget should reflect your income and realistically project what you can afford. I’m lucky enough to have a weekly budget, but if I got paid monthly it would be a monthly budget.
- It doesn’t have to be complicated. I use an Excel spreadsheet. It lists what comes in and what goes out. I also track what is due when so I know when I can “splurge” or when that annual association bill is due. Usually I go plan out about 1 year – but monthly or weekly works well too.
- A budget looks forward. A checkbook will tell you what you spend and it can show your habits – like a food diary. It will tell you where you have been. While a budget tells you what’s coming up. Not just a light bill, but how about having cash for your next vacation or even paying cash for Christmas?
- It’s not perfect. Setting unrealistic goals will make your budget ineffective. Keep in mind that a little padding is necessary for the unexpected car repair or doctor visit. Make sure you go back and revisit your budget as your lifestyle and your goals change. Your budget should change with you.
Budgeting should be easy. Consider it a road map to security. Sure you might make a few wrong turns, but the point is to enjoy the ride. Keep it simple and let it change with you. You may decide a little debt is worth the cost – a budget will only help you make an informed choice which is all financial planning is about.
If you want to increase your financial intelligence I have a wonderful e-book you can download. Just click here the link… Enhance your Financial Intelligence
Up next, credit cards. Why do we need them? When do we use them and how do we get rid of them? I struggle with this and I bet you do too. Hopefully, we’ll find the answers to these questions together.
Cheryl Richter is a Christian that happens to be a CPA. She has over 15 years of experience in the Audit profession.She has written for the Kansas City Star, Faith section. You can contact Cheryl via e-mail at firstname.lastname@example.org.