Menu
Before You Set a Budget!
Oh, that dreaded “B” word! I know. I know. You hate the idea of a budget. I do too. We all know we should be on a budget. We all know that we should stock away as much in savings as we can. We all know that we should have an “emergency fund” piled away somewhere. But, face it. The reality is budgets are really easy to draw up on paper and are really great intentions but your day to day life is much more complicated. And why bother going through the work of tracking where every cent you earn goes if it is far too complicated to track where it does actually go?
So before you caught up in “excitement” of writing a budget, here are some tips that will help you actually be realistic and stay on track.
1. Focus an Fewer Goals
Yes, I want to have $5 million dollars to retire on, pay off my house, pay off all my credit cards and car, donate a huge amount of money to my church, have enough money to send my kids to college and still have some left over. But if I focus on that I am going to be disappointed, discouraged and will just plain give up.
If I set the goal of paying off this particular credit card within the next six months, I can focus all of my attention on that one thing and am much more likely to achieve it. Then I can focus on getting that emergency fund established. Focusing on just one or two items at a time is much easier to track and measure and you will be able to see progress quicker.
2. Break your Goals Down into Smaller Steps
Instead of trying to come up with a 3-6 months Emergency Fund, start with $1,000. That’s enough to keep you out of trouble if your car breaks down or the water heater blows up. And you should be able to sock that away in just a couple of months. Then you can go back and double that, and double that, until you have enough to cover your expenses for 3-6 months.
3. Prioritize!
Be honest with yourself and really focus on what is most pressing. Having $500,000 in your IRA sounds great but if you have $200,000 in debt at 20% interest rate, you are fighting an uphill battle. Which of your debts is costing you the most amount of money each month? Should you get those paid off first? Can you negotiate better terms with your lender?
4. Start Now!
Time is your biggest ally when it comes to finances. The longer you can put money away that greater your chances of yielding a higher return. Procrastination is your worst enemy. The longer you wait, the more difficult it is going to be. Period.
5. Be Prepared for Change.
Just because you wrote it down and it looks good on paper does not mean it will work. A budget should be flexible and change as often as you need it to. You know how life is, as soon as you get a step ahead something is going to come along and test your determination. Don’t lose faith. Stay on track and it will be easier and easier to deal with next time.
6. Use Technology.
Manual budgets do not work. They take way too much time and there is too much room for human errs. Take advantage of your banks online transaction trackers or budgeting tools to automate as much as possible. Also check out mint.com or cnn.money.com or any of the other thousand sties out there.
So before you caught up in “excitement” of writing a budget, here are some tips that will help you actually be realistic and stay on track.
1. Focus an Fewer Goals
Yes, I want to have $5 million dollars to retire on, pay off my house, pay off all my credit cards and car, donate a huge amount of money to my church, have enough money to send my kids to college and still have some left over. But if I focus on that I am going to be disappointed, discouraged and will just plain give up.
If I set the goal of paying off this particular credit card within the next six months, I can focus all of my attention on that one thing and am much more likely to achieve it. Then I can focus on getting that emergency fund established. Focusing on just one or two items at a time is much easier to track and measure and you will be able to see progress quicker.
2. Break your Goals Down into Smaller Steps
Instead of trying to come up with a 3-6 months Emergency Fund, start with $1,000. That’s enough to keep you out of trouble if your car breaks down or the water heater blows up. And you should be able to sock that away in just a couple of months. Then you can go back and double that, and double that, until you have enough to cover your expenses for 3-6 months.
3. Prioritize!
Be honest with yourself and really focus on what is most pressing. Having $500,000 in your IRA sounds great but if you have $200,000 in debt at 20% interest rate, you are fighting an uphill battle. Which of your debts is costing you the most amount of money each month? Should you get those paid off first? Can you negotiate better terms with your lender?
4. Start Now!
Time is your biggest ally when it comes to finances. The longer you can put money away that greater your chances of yielding a higher return. Procrastination is your worst enemy. The longer you wait, the more difficult it is going to be. Period.
5. Be Prepared for Change.
Just because you wrote it down and it looks good on paper does not mean it will work. A budget should be flexible and change as often as you need it to. You know how life is, as soon as you get a step ahead something is going to come along and test your determination. Don’t lose faith. Stay on track and it will be easier and easier to deal with next time.
6. Use Technology.
Manual budgets do not work. They take way too much time and there is too much room for human errs. Take advantage of your banks online transaction trackers or budgeting tools to automate as much as possible. Also check out mint.com or cnn.money.com or any of the other thousand sties out there.
If you need any more information on this topic or buying or selling a home, contact us. We are here to help.
Pamela Edwards, realtor email me (469)877-5631 Ebby Halliday Realtors, Inc
HOME BUYERS DATABASE SERIES