Picture this, you have decided to set some sturdy financial goals; you have created a strict budget that allows for your rent and Mister Noodles. Then after a couple of days you come to the conclusion that you cannot live off of Mister Noodles alone; you start to miss things like meat and potatoes, the next thing you know you are sitting down to a steak dinner and ….wham…. your budget is broken. Sometimes people need to create a great budget in order to cover every aspect of their financial needs, no matter if they think they are doing all right with saving their money; there can be emergencies that pop up that they are not prepared for.
Using Your Goals to Set a Budget
Many people do not know where to start when they want to create a great budget; it is very simple, start with your goals and continue from there. Some examples of goals that could be used to create a great budget are the following:
- Pay off mortgage
- Pay off car loan
- Pay off credit card debt
- Save for emergencies
- Pay off student loan
- Save for a vacation
- Save for my children’s education
When you want to create a great budget, you must first budget in your needs; then you can distribute the rest of your income to your wants and goals.
A Realistic Budget
Many people tend to spend more than they can afford too, others tend to save more then they should. They usually realize this when they are standing in line and they cannot get what they want because their transaction was not approved, or the dreaded overdraft on their bank account…yikes! For some people this happens a few times before they realize that they need to create a great budget, or any budget for that matter. Even those people who have a healthy income have to realize they are not the richest people on earth and should not spend their money as if they are.
Having a ‘Budge’ in Your Budget
Creating a super strict budget is a huge mistake that is commonly made by people. The determination to get to your financial goals is there, but creating a budget that is tighter than a pair of spanks is not ideal; nor will it allow you to have some fun, and who does not like a little fun in their life!
We all have times in our lives that we look at something and think ‘oh…… I want that so much.’ This is where the budge in budget comes in; if you plan a splurge, or save for something you really want then it will avoid the overspending and destruction of your plan.
Know the Areas That Are Problems
You need to know where all your money goes, and for some people they can pick out where their problem areas are. Places such as a used clothing store, the large supermarket that has everything but the kitchen sink, or bulk discount stores, could be considered problem areas because people tend to overspend in these places. Sometimes it can be the small amounts spent here and there that are problem areas too. There are people who go from store to store for the sales, and while spending more money on gas to get there it is not ideal for their budget in the long run. In order to create a great budget you need to determine what expenses are really needed or not, too many problem areas can bust your budget wide open and ruin your goal you have set for yourself.
Thinking beyond the Month
For most people their budget is done from a monthly basis, but they also need to remember their annual payments in their budget as well. Yearly memberships and insurance premiums are payments that often get forgotten until they are due. For some the holidays are the budget busters because they are not a part of the budget or saved for. In order to create a great budget you need to factor in all of these expenses as well as any other expense that is not monthly.
In The End
Budgeting is a constant learning experience, on one hand you do not want to be strict, but on the other hand you do not want to be spending all ‘willy-nilly’ either. You should always make sure that you have an emergency fund set up because just like the term ‘emergency’ suggests there are always unexpected things that pop up; like the tow you needed because your tire broke in the middle of nowhere. We all make mistakes that we have to learn from, financial mistakes are no exception, it is ok to get frustrated with your mistakes, just hang in there, and do give up you will make it work.
