Personal Budgeting 101

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How many times have you heard on the radio, TV, or some news channel how a celebrity ended up broke and destitute? Young people have a hard time fathoming the thought that having more money would be easier, right? The truth is more income is not a precursor to financial freedom as many wealthy and now financially struggling celebrities can attest to. I make a point of using an example of riches to rags because simply put – having money is a management topic, weather we make a lot of it or not.

The truth is managing your finances is important because living without money management practices, at any income level, is a recipe for stress and frustration. So, the first step in place is to say out loud “Personal Budgeting is important”.  Once you can acknowledge that, we can digest ways that budgeting will benefit you in the long run.

Next is to have a plan in place. 

So what do we mean by a plan? I am glad you asked! Welcome to Personal Budgeting 101. There are a number of methods to look at. The thing to keep in mind is to find something that works for you. Much like brushing your teeth and flossing. You can find several ways to do it but without it you are guaranteed cavities and a big dental bill in the end!

There are several methods out there you can choose from. You can build a budget that revolves around ideologies like the 60% rule – where a fixed percent of your household income goes to fixed expenses. There is also the 25% rule – limiting your overall housing budget to a fixed percentage of your take home pay. You could try the Zero rule – allowing for every penny to be allocated to a category in your budget. Lastly, the famous Envelope system utilizes a physical cash system utilizing the common office envelope. 

Some things you want to keep in mind as you consider a budget system for you are to keep it simple, be flexible, stay accountable to a goal, and be realistic.  If managing money were natural we would all be better off for it but truthfully,  even financial experts need to heed their own advice and reach out when things get tough!

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