Stick to a Budget

Growing up in a blue collar town, I’ve seen people struggle and live paycheck to paycheck. Many may think that growing up that way is a negative experience, but I think it was positive. That blue-collar mentality is something I will always carry with me. They never had a trust fund to fall back on, never look for handouts, they wake up and do what they have to do to make a living.

No matter who you are, where you are, or how much money you make – there are so many people who never set a budget, or focus on having savings. People always joke that they will be working until the day they die, which could be a reality if you don’t make a budget and stick to it!

Every December, I sit down in front of my computer with Google sheets pulled up and begin preparing our budget for the upcoming year.

  1. Income – I plug in our household income and then go through last year’s taxes to get a rough estimate on how much was taken out. On average, we deduct 25% from our annual household income right off the top before we do anything else. I also divide our annual net income by twelve, so we can see how much we make per month.
  2. Expenses – Once we see our net income, I begin listing all of our expenses. One thing many of us don’t include is miscellaneous expenses such as entertainment, repairs, doctor visits, etc. This could throw off your budget in a big way if you don’t account for it at the beginning of the year.
  3. Savings – After we have our income, and expenses sorted out, I like to move to savings. When I work on our savings, I update how much we have in our savings from what we had listed the previous years. In this section, I also like to list assets, such as how much equity we have in our home, or the value of our cars.
  4. Retirement Goal – This is the fun part, this is where I plug in a formula based on how much we plan to save each year, and add interest/investment projections into the spreadsheet as well. It is very important to set a retirement goal when setting a budget because it gives you something to look forward to and makes it less likely for you to blow your budget.

I hope this encourages you to begin working on a budget for 2019 if you haven’t done so already!

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