Instead, it is the blueprint for achieving your financial goals. It’s not simply a brain exercise or even a benchmark to shoot for. The important part is holding to your budget. Anyone can take a reservation, the important part is to hold the reservation.” So it is with your budget. After the clerk states, “I know how a reservation works.” Jerry, using copious amounts of body language, responds, “I don’t think you do. She has his reservation, but the car he reserved is not available. I’m reminded of a popular episode of Seinfeld where Jerry and Elaine are at the car rental counter in a dispute with the desk clerk. Once you have finalized your budget, the challenging part begins. Can you get the same coverage for less cost? Do you have the best cable/wireless plan for you and your family? Can any debt you are carrying be refinanced or consolidated at a lower cost? You may be amazed how much can be saved by honestly reviewing, cutting or optimizing your monthly commitments. Review your monthly fixed costs like service fees and insurance premiums. Once you’ve completed the first draft of your budget, step back to see where your funds are going and if there is an opportunity to save. ![]() ![]() It is always better to be pleasantly surprised than to exceed your budget. As you prepare your budget, include your net cash inflows (take-home pay) and all outflows (expenses) such as tithes, mortgage, utilities, wireless and cable, auto loan, food, entertainment, etc. Instead, use it as a template and revisit it each month. Don’t expect it to be perfect on your first try. While there are many others, Dave Ramsey and Crown Financial offer two of the most popular personal budgeting tools.Ĭreating your initial budget can be challenging. They will walk you through the budgeting process, offer advice, and help ensure that the budget you produce is all-inclusive and complete. There are numerous personal budgeting tools available to you, both in print and online. Now that your goals are set and you have a good idea of your take-home pay (income after taxes, benefits, etc.), it is time to create your budget. Accelerate the accomplishment of a goal or goals, increase your retirement investment, or simply save more in your own interest-bearing savings account. If you don’t need the funds for monthly expenses, take those “excess” funds and put them to work in your budget. No one has ever received an interest check from the IRS along with a refund of their overpaid taxes. Too much tax withholding can needlessly restrict your cash flow and extend the amount of time it will take to attain your financial goals. On the other hand, you really don’t want to receive a huge refund. First, you want to be sure that you are withholding enough taxes so that you don’t have an unexpected tax bill at the end of the year. Now it’s time to do a little tax planning. Take time to consider these long-term commitments, and then break them down into monthly allocations to be included in your budget. Other long-term goals may include a college savings plan, paying off your mortgage, or building up an investment portfolio. Use the best vehicles available as you establish your retirement goals, whether it is a 401(k) or 403(b) plan with your employer, an IRA, or a host of other options. Possibly the most important long-term goal is saving for retirement. Long-term financial goals, those that will take greater than twelve months to achieve, will also be built into your budget. List out these goals, as you will need to build these commitments into your budget. Common short-term financial goals include saving for a vacation, eliminating credit card debt, saving for a major appliance that needs to be replaced, and other similar events. Short-term goals are financial goals that you want or need to achieve within the next twelve months or less. ![]() These goals will shape your budget and can be categorized as short-term or long-term. I’ve grouped these strategies into five steps: establishing your goals, planning for taxes, creating your budget, living within your budget, and evaluating your budget regularly.īefore you put a pencil to your budget, take some time to really think about and define your financial goals. These strategies are simply a plan to prioritize and allocate your resources to meet desired and established financial goals. Although seeking the advice of a licensed financial professional may be a wise decision, and necessary depending upon the complexity of your finances, you can create and implement some basic strategies yourself. ![]() For many, financial strategies are a mystical or magical potion better left to those with acronyms behind their name.
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