How to Establish A Monthly Budget
In today’s working class, which is practically every
able-bodied adult, everyone wants to earn, save, or invest enough money to do
more than simply, ‘get-by’, right?
The plague of this never-ending cycle otherwise known as ‘paying bills’, never seems to loosen
its grip upon the people of the United States.
The U.S economy has stumbled since 2008, when the current recession
began; making it more difficult for the working class to earn a living and
provide for their families. Statistics
and reports have shown a steady increase in unemployment rates across the
country, corporate downsizing, layoffs, and overseas outsourcing, and as of
June 2014, the National
Deficit was a reported $17.6 trillion dollars!
Despite popular belief, the U.S. has not recovered from the recession;
little progress has been made to be quite honest. Because of a dilapidated economy, many people
have resorted to alternative means of supplementing their income, unfortunately, these means only places
them farther into debt. Reluctantly, many people chosen to ‘cash-out’ their 401Ks as an alternative
source of income, sadly, this is only
a temporary solution that consumes all retirement savings. Others have taken out repeated payday and
title loans, whose interest rates are astronomical as Wikipedia explains how a
$100 14-day loan can have an interest rate anywhere from 391% to 3733%! There are also heavy repercussions for
defaulting on a payday or title loan; it can severely damage your credit, you
can be legally sued in a court of law, and you could even lose your car.
With the economic status as defunct as it is, many working
class Americans, the middle-class more specifically, have realized now, more
than ever, the importance and necessity of budgeting and adapting to ‘get-by’ with ‘less’. For some reason, the
word ‘budget’ and/or ‘budgeting’, causing a lot of people to
cringe. Why? Because when you
budget, you have to place financial restrictions upon yourself, you have to
differentiate ‘wants’ from ‘needs’, and you can no longer indulge or
splurge on those wants—and the truth
is, no one likes the thought of having to do that, and no one wants to do
that. So now the question is; how do you
create a monthly budget?
Well, first of
all, you start by getting yourself in the mindset of doing the things mentioned
in the last paragraph. Find a source of
motivation; maybe you’re trying to buy a new house or car, or maybe you know
your kids are depending on you to provide for them—whatever it is, find a
reason to get and stay motivated and self-disciplined. If you know why, you've decided to start budgeting, and if you have a specific
goal as the end result, you’re more likely to see it through and be successful.
Why A Monthly Budget?
The reason for budgeting on a monthly scale is because
that’s how 90% or more of the working class operates, society itself actually;
on a month-to-month basis. Think about
it; you pay bills monthly, your job pays twice per month, businesses calculate
their annual profit and
loss by monthly totals—this is simply the way America functions, we’re a ‘monthly’ country. Therefore,
you need to be able maintain month-to-month.
Set Your Goals
Although a goal can be a source
of motivation, it is not the same as motivation. Your motivation is your ‘driving-force’, so-to-speak, your ‘goal’, is what you’re actually working to accomplish and achieve by
budgeting. It’s a good practice to set
long-term and short-term goals. An
example of a short-term goal would be buying that new car, or a late model used car, in one year. Always remember you can modify your goals as
needed, and you should always know ‘why’
you’re working towards a goal, and lastly, your goals are always priority.
Be Aware of Your
Before you can create a budget, you have to know how much
money or income will be available to you each month. The best way to get that amount is to base
your budget upon your Net Income. Your net income is essentially the amount of
your paycheck after taxes and deductions.
Once you have that figure, you can then begin planning your budget.
Planning Your Budget
Split your net income between ‘fixed expenses’, such as a monthly car payment, and ‘variable expenses’ such as grocery
shopping totals, which may vary. Monitor
these expenses to determine what adjustments can or should be made, and what
works best for you. It’s always a good
idea to maintain some type of savings in cases of emergency.
Track, Track, & Track
Always track your spending.
This can be a major headache, a migraine actually, but there are plenty
of software programs to assist you in accomplishing this. Most Android and iPhones even have apps that
can help you as well. And if all else
fails, simply hold on to your receipts.
Budgeting doesn't have to viewed as a punishment, there are
perks to it, afterall, it is ‘your’
budget, so tailor it to your measurements until it fits ‘you’, that is, unless you’re the husband, then ‘she’ sets the rules. Keep in mind, you can only customize the ‘variable expenses’ portion of your
budget—the ‘fixed expenses’ are
labeled that for a reason. An example
is; maybe you cut back on dining out and going to the movies so you’ll have
extra cash for the new HD flat screen TV—do what works best for you.