January Newsletter

I hope everyone had a safe and happy holiday season. Our goals for the new year are to be consistent, disciplined, and realistic. The word “habit” is defined- a thing done often and, hence, easily. A budget can help us develop good spending habits. I’ve said this before and I’ll continue to say it… one of the most effective ways to get out of debt is to use a BUDGET!

Keep track of Your Monthly Expenses.

 Before you can create a household budget, you’ve got to know what your monthly and annual expenses are. Write down your expenses for 30 days if not sure where your money is going (everything from your car payment down to a pack of gum). You’ll be surprised how much money we spend out of habit on items that we can really do without.

Keep Your Budget In Proportion To Your Income.

 If you’re not sure what a good proportion is, here’s an example of what your monthly budget expenses (percentages of net income) could be. If you have one category that’s higher or lower than what’s listed here, then you should adjust the remaining categories accordingly. Remember one your goals is to become debt free within 3-5 years, this may force you to decrease or eliminate certain categories such as donations or savings.

• Housing 30%
• Food 10%
• Debts 5%
• Medical 5%
• Insurance 5%
• School/Childcare 5%

• Auto 10%
• Clothing & Gifts 5%
• Entertainment 5%
• Investments/Savings 10%
• Giving/Donations 10%

Total 100%

Create A Budget For All future Expenses.

 Whatever budget method you decide to use, make a plan for all of your annual expenses on a month-to-month basis. For example, if your have an insurance bill due in December for $600, your monthly budget sheet should read $50 per month for insurance. It’s a lot easier to put aside $50 per month than to fork out $600 at once.

This should be the case for all of your expenses. Let’s take another scenario in which planning ahead can be to your advantage. If you estimate that you spend a total of $500 per year on the repairs for your car, then you should be budgeting (putting aside) about $42 per month. This means that if your car is running fine and doesn’t require any repairs for five months, you should have about $210 in a separate or savings account until you do actually need the money to repair your car.

Here is a blank budget sheet for you to get started, Good Luck!!!!