A San Antonio Guide to Effective Budgeting

Chris Reddick |
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How to Build a Realistic Budget and Stick with it

Whether you’re earning a six-figure salary or just out of college, creating and maintaining a budget is a must. Having a budget that you actually use can help keep spending under control, bolster your savings account, adequately plan for retirement, and keep debt at a manageable level. 

Creating the budget is actually the easy part. But how do you create a budget that you’ll actually use? One of the keys is your mindset. Stop looking at a budget as a negative and look at it as a way to reach your financial goals.  

So how do you create a functioning budget – one that you will utilize in the coming months and years?

Here are a few pointers for San Antonio:

  • Personalize it. Don’t just accept the default categories that are typically offered in most budget templates. If you don’t spend a lot of money on vacations, but you like expensive dinners out, make sure that you include dining out as an expense category. If you find that you begin to take more vacations, you can always add that category down the road.
  • Be sure to include one-offs and other incidental expenses. Most of us are aware of how much money we spend on clothing, on entertainment, or for our mortgage and utilities. But what about the things that can pop up and potentially derail any budget if they’re not accounted for properly? Things like an emergency trip to the vet for Sparky, a replacement vehicle after your car simply dies in the driveway, or even unexpected school expenses your child forgot to tell you about. These things happen and in order to account for them properly, they need to be included in any budget that you create. 
  • Include accurate income projections. When we’re budgeting our income, it needs to be the income that we know, or reasonably expect to earn. Not the commission you may earn, not the year-end bonus that you may or may not receive, not the income from the part-time job that you intend to get, but as of yet, don’t have. Only include the income that you are currently earning.
  • Create an ‘actual’ column. This more than anything can help you stick to your budget. Take the time at the end of the month to enter all of your actual expenses and compare them to your budgeted amount. If you’re under, congratulations! If not, take a look at where you fell short and see if you need to make an adjustment, or just scale back your spending a little bit more. 
  • Include retirement savings in your budget. It’s so important to start planning your retirement early. While younger folks may be willing to put this off, don’t. The sooner you start to plan for retirement, the earlier you can retire (if you want), or simply have the lifestyle that you wish. Even if you’re on a tight budget, include retirement savings.
  • Make your budget fluid. Like everything in life, things change from year to year, and sometimes from day to day. Make sure that your budget reflects your situation today, not your income level and expenses from five years ago.
  • Make it a habit to review your budget once a month, where you can make any changes, add to remove categories, or even adjust budgeted amounts. 

It’s time to stop looking at a budget as a negative and start using it to achieve your financial goals. 

In these tough times, it’s important to take some relatively easy steps to stretch your budget.

Start with your credit cards. Often people overlook where their money is going when it’s as easy as a tap, not to mention interest and fees:

1. Pay your credit card balance in full each month. If you don’t pay your credit card balance in full each month, you will be paying steep interest rates on the balance. That interest rate could easily be 15% to 20% or more annually.

2. When getting cash from ATMs, use only those affiliated with your own bank so you can avoid the transaction fees charged by “foreign” banks. These fees typically run $2 to $3 per transaction. Or get a card from a bank that absorbs fees.

And make sure you’re truly keeping track of your bills. Auto-payments make it too easy to let month after month go by without tracking each item spent.

3. Look At Your Household Bills Each Month. Telephone, cell phone, cable/satellite, internet service provider, and trash removal service. Can any of these be reduced by switching service providers? Do you use all the calling features you pay for? Do you watch all those channels in your current cable or satellite package?

4. Consider Getting Rid Of Some Of Your Non-Essential Household Items. If you have a cell phone and a home phone, perhaps you can give one up. If you don’t mind watching television shows a bit after the premiere, you can save money by getting rid of cable or satellite service.

5. Need some extra cash? Look through your closets and attic for stuff to sell on eBay. Did you know that the average household has more than $1,000 worth of items that could be auctioned off for cash?

Summary

In practice, a budget is at the core of any successful enterprise San Antonio  – both business and personal; however it is the ability to strictly adhere to it that makes it effective. Budgets that are unrealistic or too difficult to manage are quickly swapped out for good intentions. However, budgets or spending plans that reflect your reality while providing a realistic path to improving your cash flow, can not only be motivating, they can be liberating, freeing you from having to make difficult choices. How? Because your budget decides for you. Let's go San Antonio and build effective budgets!

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.

At Chris Reddick Financial Planning, we Educate you about your personal finances, Inspire you to make meaningful change, and help you Achieve your short- and long-term financial goals. Learn more about the movement at https://www.chrisreddickfp.com/