Monday, 4 May 2015
No matter where you are in your career—first job, mid-career, or nearing retirement—it's a simple truth that without a budgetary playbook, you're losing the game before you start.
Good budgeting skills can make navigating your financial life a lot easier. After all, no coach goes into a game without a plan, and in the game of life, neither should you.
You'll be more successful with your budget if you know why you're making one. Set aside some time to think about these "whys" before you look at the numbers and set up goals.
Smart players know to listen to the experts, in this case, financial planners. While exact percentages vary, most financial planners recommend that you allocate your income to various expenses as follows:
Look at all your monthly expenses. Keeping in mind the recommended budget allocations listed above, tally up your spending by category. You can individualize categories to fit your specific needs, e.g. adding a category for charitable donations or gifts.
If there is a mismatch between your spending and your desired budget, do some homework. Dig into your spending habits and figure out where the problem is. Spend a month noting every single purchase you make.
Start small when cutting back your budget by eliminating the things you'll miss the least. Simple examples include:
These may seem simplistic, but it all adds up. The point is to establish control over your spending. Once you determine what you can, and can't, afford, your financial life will become a whole lot easier to manage.
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