Have you ever thought something was difficult so you didn’t even try to do it? A lot of folks think that about drawing up a budget. You don’t have to be a rocket scientist to draft a budget. Rob talks you through the basics.
Have you ever thought something was difficult, so you didn’t try to do it? A lot of folks think that about drawing up a budget. You don’t have to be a rocket scientist to draft a budget. Like anything, there’s a bit of a learning curve but it gets easier the more you try. This is MoneyWise nLive - biblical wisdom for your financial journey.
We talk a lot about the need for budgeting on this program and we’ve developed the amazing MoneyWise app to help you do it. It has three different ways you can set up your budget, and a lot money to your various spending categories. Just look for “MoneyWise, biblical finance” at your app store. We also have trained volunteer coaches who can’t wait to help you draw up your budget. Connect with a coach at MoneyWise.org.
Before we get into the basics of budgeting, it’s important to understand that EVERYONE needs to do it, no matter how much or how little money they have coming in. There’s no other way to stay on top of your spending, get out of debt, give to your maximum potential, and plan for the future.
Step 1 - list your monthly income. That means your “after tax” income. If you’re a W-2 employee and your employer withholds taxes, it’s the amount of your paycheck. If you have other income where taxes aren’t withheld, you should only count about 70% of that, and put the rest in savings for tax time.
Step 2 - list all of your fixed expenses, the things you pay the same amount on every month. These would include your rent or mortgage payment, auto loans and insurance, credit card minimum payments and student loans. And of course, include your giving in this step. Determine a percentage for your giving and do your best to stick to it.
Step 3 - list your variable expenses. These change from month to month. Your electric bill would be one example, if you’re not not on a budget billing plan. Other variable expenses would be groceries, household items and , and gas for the car. Obviously, these are just estimates. If you find that difficult, you can go over your receipts and bank statements to ballpark those amounts, and you can adjust them in the months ahead. In fact, plan on adjusting them. Nobody gets estimated variable expenses right the first time.
Now you can add up your variable expense estimates and subtract that from your remaining income.
Step 4 - budget some money for your “wants.” We’ve already identified your needs. Now give yourself a little spending money for a few things that make life a little easier and more enjoyable. This could be an occasional dinner out, or some other favorite activity. Use these as “rewards” for staying on budget. And here I’ll suggest a percentage. Try to keep your “wants” to 5 percent of your take home pay, 10 percent at the very most. Because you’ll need every penny for what comes next.
Step 5 - budget to pay off any consumer debt you have, especially credit cards. You need to determine the amount of your remaining discretionary income that you can put toward that debt, that is, above your minimum payments. Let’s shoot for another 5 to 10-percent of your income, 10% is better.
And now you’re probably wondering, “Hey, why not throw all of my remaining money at that debt? That would be great, but Step 6 is to budget something for savings. And if you have credit card debt, we’ll assume you don’t have an emergency fund. So start one. Put some amount from every paycheck into liquid savings so you can get to it easily when an unplanned expense arises.
You may have to split your remaining available money between paying down debt and building your emergency fund. Try to get between five and 10% of your remaining income into each category.
Those are the basics for setting up a budget, but there are two more things you should do to increase your chances of STAYING on it:
1 - Look for ways to cut spending. Can you raise or lower the thermostat to trim your utility bills? Can you cut something from the grocery budget? You may have run out of money before completing Step 6, and this is how you make sure you have enough money for all of them.
2 - Set up a system for tracking your spending as you go forward. This is essential for knowing whether you’ve overspent in one or more areas. Once more, the new MoneyWise app comes to the rescue. It’ll tell you in real time exactly what you’ve spent in which category of your budget, so you can make adjustments as needed to stay on track.
Living faithfully on a budget will enable you to stay on the right side of Proverbs 21:20, which reads, “Precious treasure and oil are in a wise man's dwelling, but a foolish man devours it.”
On-Air Mention:
For thousands of people everyday, the MoneyWise app has been a proven tool to help them consistently stay on track with their budget and expenses. And we frequently hear that having the biblical content and community discussions on the app is invaluable!
In addition to managing all of your accounts in one place, the MoneyWise app can also keep you disciplined to spend more wisely.
Choose from 1 of 3 options depending on your management style, and it's available on desktop or mobile. Go to moneywise.org and click the App tab for more details.
Next, Rob answers these questions at 800-525-7000 or via email at Questions@MoneyWiseLive.org:
If you have $10,000 in some CDs that you were keeping for emergencies, should you move this over into an I Bond?
If you have several adult children and one is doing particularly well financially and has offered some "mad" money to you, is it right to take this?
If you sold a house and are about to have about $800,000 extra money and you already have a retirement fund, what should you do to plan for this windfall?
If you're being quoted very high auto insurance rates, where can you go to find better? policygenius.com, thezebra.com
If you're retired and living on just your pension and you're concerned about losing more money in your 403(b), should you pull the money out and put it into a variable, index-fund annuity?
If you logged into treasurydirect.gov "...using the system, you understand and consent that there's no reasonable expectation of privacy" warning message, should you be concerned about this Privacy Policy introductory warning message?
Jerry Bowyer - Market Commentary
Up 800 yesterday and down 400 today, the market is about each day's news isn't it?
You're a student of history, was the original intent founding the Fed for what they're doing today?
Did we have a recession the first half of this year and can we go back into one?
We saw a crash in the UK government bonds market last month causing hundreds of pension fund to collapse; is that a reason to suspect that might happen here in the US?
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