A couple of years ago, my wonderfully talented sister-in-law published a book called ‘When God Says Wait’. A great read that grapples with life challenges, faith and the patience that is needed with so many things in our own stories.
It got me thinking about how needing patience permeates many parts of our financial life. We have to give time for our retirement assets to grow. We have to wait to collect social security. And some times we have to wait for our Budget to say it will be ok to spend money.
There are all kinds of ways to Budget. Some like the ‘cash in the envelop’ method. (Do people still use cash?) Some like the ‘Pay Yourself First’ method (my favorite). The reality is most Americans don’t create a formal budget. And those that do, don’t stick with it for very long. It’s a pain to keep track of all those transactions. And while I’m a big fan of account aggregation software to keep track of my spending, most people just don’t want to hassle with looking at every dime and penny. So forget about the cost of the cheeseburger or the soda at the QT. Don’t obsess over the detailed budget. Instead consider a simple spending plan.
The first thing to learn is that the one constant for all of us is that we have a finite amount of income to deal with. And income is where we have to start with any budget conversation. Determine your take home pay and then just focus on the major fixed monthly expenses like:
- Your rent or mortgage
- Utilities and insurance
- Loan payments (student, auto, etc.)
- Minimum credit card payments
- Desired savings and investments (Pay Yourself First)
Knowing what is left after you subtract those expenses will help you understand how much you can spend on the fun stuff. This budget knowledge is what will decide if you have to ‘Wait’ to take that special vacation, buy a new car or any other purchases that are desires and not necessities.