Realistic Budgeting

Jan 24

You’ve heard the incessant harping of friends and family about the importance of being wise with your money and budgeting. Unfortunately for most, you never heed that advice until you find yourself in a less than desirable financial situation. As with most things, it’s typically easier to get ahead of a pitfall than try to do damage control after the fact. If you’re like most people, even if you want to be responsible and take their advice, you don’t know where to begin. 

Making and most importantly sticking to a budget doesn’t have to be overwhelming. There is a straightforward formula for figuring out your budget. The first step is to figure out your monthly after-tax income. Half of that post-tax amount is what you should spend on your basic necessities. To be clear, necessities are your living expenses such as mortgage or rent, utilities, groceries, and basic living expenses. The remaining half is split, 30/20 between wants and savings/paying off your debt, respectively. 

In order to create your budget and allocate your expenses to the appropriate area, you must sit down and look at your outgoing money flow. To be sure you don’t overlook anything, reference old bank statements and list what you spend your money on and how much you spend. The pragmatic, realistic flow of where your money is going before you attempt to make your budget will be an integral component in not only the success of creating the budget but also with adhering to it. 

So where does your money go? Are you mindlessly spending a lot of money on eating out? Does the bar on the weekends have a lot to answer for? Do you find that the weekends of drinking also turn into a full-on binge and includes illicit drugs? Not only are such indulgences harmful to your health, but they are a drain on your resources. If, after some soul searching, you find that you’re using drugs or even abusing prescriptions on a regular basis, you may have an addiction issue that you need to get control of. Gaining said control doesn’t have to be outside your grasp; you can seek the help you need through an outpatient drug treatment program. The sooner you are able to control your addiction issues the easier it will be to be more accountable for your money.

So why budget? You know it sounds like the sensible thing to do, but if you actually understood why a budget is important, it may be easier to stick to. Having a budget in place will help you to reach your financial goals, regardless of what they may be. For some, their goals are as simple as enjoying a luxurious vacation; for others, it may be to purchase a home and plan for your retirement in many years to come. Regardless of your motivation, your goals are attainable with the necessary planning. 

With the introduction of credit cards, it is far too easy to spend more money than you have on things you probably don’t even need. Compiling needless debt by overspending is never beneficial to your financial health. By following an allocated spending plan, you can learn about which bad spending habits you may currently have and take the needed steps to correct them. 

Also bear in mind, life is not always certain or predictable. Without being wise with your resources, when you are faced with an emergency, you will be better equipped to deal with whatever curveballs life throws your way. Creating a realistic budget and sticking to it is one of the most pivotal, responsible things you can do to ensure the peace of mind that financial security offers.

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