Surefire Way To Insure Your Financial Future!

Anyone can learn how to make a budget using a worksheet and ways to save money. It only requires a monthly assessment of income and spending.

Budgeting is not taught in schools. Maybe it is considered too fundamentally easy to limit spending to what you earn. If you have learned that basic fact, you can skip this page. There is little that you can learn by reading on. Wait! Read more if you want to secure your financial future.

Do Professional Athletes Need to Control Their Spending?

Even the wealthy need to control their spending. Why? Lottery winners and professional athletes have blown through millions of dollars and have filed for bankruptcy. There is no dollar limit on who needs to account for their spending. Unfortunately, we live in a society that promotes spending.

I have always been amazed by immigrants, who enjoy the freedoms in the United States that allow earning limitless amounts of money. Yet, they have not adopted the spending habits of those born here. Often they accumulate an enormous "net worth".

A person is wealthier than most, in this country, if they spend less than they earn. They, not only have no debt, but are saving money. With or without a budget, they are accumulating assets. Their financial future could be secure.

Follow This Priority List and You Will Be Rich!

  1. Eliminate debt - (except a home mortgage), car loan, credit card debt, others.
  2. Plan for the Future - (that is where you will spend the rest of your life), take advantage of tax-deferred 401k, IRA's, and similar accounts. Save 20 percent of your income. Pay yourself first, then pay for the electricity.
  3. Pay for necessities - rent (shelter), food, utilities, others.
  4. Buy and pay for non-necessities - if funds are available.
  5. Buy and pay for "fun things" - if funds are available; eating out, movies, cable TV, vacations.

The Budget!

If the priority list above does not make sense to you, stop reading until it does.

  • List all income - paychecks, bonuses, interest, investment earnings. Try to come up with a monthly average.
  • List all (necessary) expenses - rent or mortgage, insurance, loan payments, groceries, utilities, retirement savings, emergency fund, etc. Try to come up with a monthly average.
  • Follow the priority list above.

(Note: I have purposely made this as simple as possible. The more complicated a budget is, the less likely that it will be followed.)

You Know - I Never Needed That!

Getting spending under control can be exciting - as can be accumulating money in a retirement savings account. After awhile, the need to spend is easily replaced by the need to save. When that happens disposing of not needed "things" and "clothes" is no longer necessary.

Part of the transition is no longer wanting something that you never needed. And securing that which you will need, i.e., retirement savings and an emergency fund.

List of Items That Can Dramatically Reduce Your Spending!

  • Medical - carefully evaluate choices for medical and dental insurance (expenses can be huge).
  • Shelter and transportation - refinance a mortgage (the savings can be substantial); consider one car plus public transportation, home and auto insurance.
  • Essentials - groceries, household supplies, toiletries, makeup, clothing (purchase with your budget in mind, look for bargains)
  • More essentials - utilities (use less often), eliminate landline or cell phone, choose basic TV cable and internet. (Note: TV and internet may not be essentials.)
  • Non-essentials - movies, hobbies, travel, pets, subscriptions, eating out, fast food, lunch cost, donations, etc.

Conclusion of How to Make a Budget!     

Following the priority list above is more important than anything else. There is software available for budgeting. It is not necessary when you start. It is extremely important to keep it simple.

After a couple of months, fine-tune your budget. Modify it as necessary. Treat your personal budget as you would a budget in your own business. Companies must make a profit or go out of business.

In time, you will do a "net worth" statement regularly, as I have done for over 30 years. That is the only way that one can measure their progress.

Return to top of How to Make a Budget   *   Retirement Finances