The Importance of A Budget
Creating and sticking to a budget is the poor middle class financial survival tool that allows for clarity and transparency. It is crucial. The best way to start is with pencil and paper. Determine your major budget categories. Transferring them to a computerized bookkeeping program is simple. We have actually set up our computerized bookkeeping system based on the following categories plus additional subcategories. It works very well for us. But you can stay with a manual spreadsheet if you prefer.
Setting Up Expense Categories
This is how we have been able to come up with a budget. We set up a bookkeeping system. First, we add up our income. From there, we have a clear picture of how much there is available to spend. Then we set up our expense categories. Everyone has their own profile based on their life, family and needs. These are the major categories we use:• HOME
• FOOD
• TRANSPORTATION
• PERSONAL
• FUN, ENTERTAINMENT & VACATION
Within each of these major categories, we have set of subcategories that reflect our expenses:
HOME
• Rent
• Household
• Utilities
FOOD
• Groceries
• Breakfast/Lunch/Snacks
TRANSPORTATION
• Auto Insurance
• Gas
• Maintenance
• Public transit
PERSONAL-HUSBAND & WIFE (EACH HAS THEIR OWN LISTING BUT WITH THE SAME CATEGORIES)
• Personal items/hobby
• Rx copay
• Medical
• Dental Care
• Supplements
• Life Insurance
FUN
• Eat Out/Celebrate
• Entertainment/Culture
• Vacation
What’s Next?
You may find, as we have, that your expenses exceed your income. As seniors on fixed incomes, as young people working more hours but earning little money, as breadwinners who has lost their livelihood, this may be your challenge too. The additional posts in this blog series will be devoted to a solution. That solution is building and implementing your financial survival toolkit.
