Welcome to My Best of Both Worlds’ Guest Blogging feature Financial Fridays!
And it’s Budget Time!
My name is Susan Quigley and I am a Certified Financial Planner (CFP) that will help you balance the Best of Both Worlds when it comes to managing money. It’s Budget Time! The first and most hated step is doing a budget. We know how much we make, but not how much we spend.
Last week I asked you to gather info on where your money goes (read last week’s post if you missed it) . We know our rent/mortgage, and things that come on a bill. But a lot of our money gets dripped away in cash, credit or debit card spending and seemingly non-recurring items like eating out, gifts and activities for our kids. These categories are hard to judge in the short run, but over a few months you start to get an average. This week we are going to figure out where your money has been going so that next week we can develop a Savings or Debt reduction plan.
Make a three column list and write each category that applies to you with how much you think you spend each month; change annual expenses to monthly by dividing by twelve. You can guess where needed, but the more effort you put into making it accurate, the more realistic your budget will be.
Bare Bones budget: absolutely mandatory – this is the “I’ve lost my job and need to make every penny stretch” budget: housing; electric, heat, water MAYBE internet, health and life insurance and medications, one phone line, basic groceries; car payment and car insurance if needed for where you live, minimum payment on all debt, student loans.
Normal and typical budget: cable tv, gym memberships, cell phone, birthday and holiday gifts, debt payments, gardener, cleaning service, personal services like manicures/pedicures, hair and hair coloring, magazine or online subscriptions (Netflix, Hulu, dating, anything you pay for), debt payments, savings, clothing, electronics, activities and fees for kids (scouting, sports, school fees), furnishings.
Non-mandatory spending budget: eating lunch and/or dinner out, vacation and entertainment including quick weekends, day trips, theater or sporting event tickets, personal purchases, clothing, “stuff”.
Debt reduction: As part of next week’s exercise, put a list of all debt as follows; amount owed, rate being charged, minimum payment and number of payments left.
INCOME! To start your budget, make sure you have your gross income and your net paycheck amounts (including how many times a year you get paid)
NEXT WEEK: The Devil is in the details! Tips on how to take your new budget outline and save $3,000 – $5,000 a year without making any major changes! Hint: it has to do with my most hated four-letter word “ONLY”! Make notes on where YOU think you can save money. We will put it all together with some easy tips to save, and how to apply it towards debt reduction or savings goals! You can also start thinking of what your savings goals are and how much they will cost.
Keep your comments coming! Check out any financial calculators and great articles on my website at www.SquigleyCfP.com Follow me @SquigleyCFP to start getting the financial Tweets of the Week (coming soon!)
Not A Recommendation, Time Sensitive, Subject to Change, Views and Opinions are strictly that of Susan Quigley only Registered Representative offering securities through American Portfolios Financial Services, Inc. Member: FINRA, SIPC Investment Advisor securities products/services offered through American Portfolios Advisors, Inc., an SEC Registered Investment Advisor Mortgages are offered thru Mortgage Advantage, Inc., which is not affiliated in any way with American Portfolios, or American Portfolios Advisors. NMLS# 414708