Far too often, having a budget for the majority of people simply means that you have taken a glance at how you're spending your money and have jotted down a few numbers on paper, but not much of a plan has been put in place.
The planning is key, and often is a little weak if you take a look at the overall scope of how you should be saving and spending.
Budgeting means your plan should include specific detail, line items and everything accounted for as far as your spending goes, along with making sure any income is verified and added to said budget.
What really defines a budget that works is one ironically that is not set in stone but rather an always changing entity when you put pen to paper. Where we tend to lose our financial footing is not taking into consideration two elements of a budget: incidental spending and spending that occurs outside of that wall of budgeting.
That is where planning and predictive measures come into play but also being able to adapt accordingly. The adaptation means if you have a month where you dump $500 into your car, your budget needs to reflect that change. If you have a hole in the roof and you have to pay $1,000 toward your home owners deductible, that money has to come from somewhere.
Now, in a perfect world, you’re savings account should be able to knock that out with no issues, but reality sets in at that moment, and you realize that isn’t in the cards due to your lack of being able to save.
Being able to save starts with that budget but also making sure you aren’t forgetting that saving starts with not only planning but making sure you are paying yourself, and if that means saving $100 per pay (or $200 per month if you assume you’re paid bi weekly), then you have to cut $200 off your expenses to be able to pull off that feat. Otherwise, you’ll never be able to save and thus your budget and its planning are going to be paltry and ill advised and relatively useless no matter how much you want to believe that anything your write out and dub a “budget” is going to work regardless.
The attention to detail is paramount, and so is making sure you when you look at a budget and devise one, you aren’t limiting yourself to the obvious and instead make it a point to think about the what ifs that the proper planning will obviously and easily negate.
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