The Dreaded Budget Talk

Catching back up with the beginning stages of the buyer process, we are gonna make the dreaded dive into the less infamous budget talk. Everyone knows what it is but not everyone sees the value. To justify my viewpoint, let me tell you about a story of person I'll call Cotton. Cotton was excited to start college. Everyone told Cotton this is what he has to do because its the next step after high school. But Cotton lost interest in just following the "trend" and took a break. A concerned counselor met with Cotton emphasizing the need to continue to build his knowledge and to use college as a tool to lifetime relationships and personal growth. Cotton found his own value in the message and returned to flourish in his studies.

Now I say all that to say that when we have responsibilities with our income, the next step is budgeting. But people give all kinds of reasons of why budgeting is dreaded but we have to find our own value in it. Some may say its too much work, there's no room for error, its a boring way to live, they aren't discipline enough to keep to the budget, or it makes their money feel small. But to all those reasons, I have one response--cater your budget to you. By doing so, you can allocate money for miscellaneous or error, reward yourself to make budgeting fun, develop habits to create the discipline, monitor your spending to see all the many places your money is used, and understand there is value in pre-arranging your money. So if your dreading the budget just consider this...

picture courtesy by www.hypable.com

Budgeting is as instrumental to our finances as sleeping is to our personal health. The average adult should maintain 7-9 hours of sleep per day. Too much or too little will have an impact on our body’s functions. Too much or too little budgeting will cause over usage of credit cards, under-utilization of income, or inability to meet bill payments. So for our future home buyers and savers, budgeting is going to be key to achieving our goals. If you are a future home buyer; give yourself some "curb appeal" by showing great payment history and discipline with debt. If you are a saver, we need to continue to grow our disposable income. 

The principal of budgeting is to add up the income and assign an allocation for each thing that you usually spend your income on. Everyone's budget will be different, you can be general or you can be very specific. It can be from daily to monthly monitoring. So I’ll give an example of a balanced budget—one that can include personal interests and responsibilities...

Pay check for 3/12/16:      $1800
Item	Budget
Rent	$900
Utilities	$100
Food	$175
Transportation	$50
Subscriptions: Netflix, Kindle	$20
Entertainment	$60
Hair	$45
Credit Card 1-Discover	$50
Tithe/Donation	$160
Savings 1-Retirement	$70
Savings 2-Miscellanous	$20
Savings 3-House	$150

I now entrust you, my readers, to start or continue to budget to find ways to maximize your income. Theoretically, the budget should be categorized by the following percentages: 50% to bills, 10% to savings, 10% to personal wants/needs, and 30% to insurance, food, travel/entertainment. Catch our next post on March 30th about how much life insurance is enough? Comment or share below or on social media at Instagram @practicalwallet, Twitter @practicalwallet,  and Pinterest @practicalwallet.