As I set down this twenty-sixth day of September and see the dawn of October on the cusp, I realize its time to start preparing a personal budget once again for the upcoming month. This is the basic stepping stone to awareness of our financial health and circumstances.
It’s Time to Budget for Next Month!
Most of the bills for this month are paid, at least by the minimum, to keep debt collectors from my door. A new month is about to begin. New bills are starting to come in for the next month, and my budget book is now before me It is important to set this time aside as a quiet and sufficient time to truly analyze everything and plan the next month in full awareness to your current situation.
Identify Your Promised Sources of Income
Let’s begin by noting at the top what income is expected next month. How much will you actually have going into the month to achieve all the tasks that need to be accomplished. As you see I began my with a known monthly income to work within of $2,575 for the month.
Encumber Your Debt Reserve
We selfishly feel we deserve and are entitled to certain things, so we pull out our credit card which has become the convenient method of purchase and pay for those things on credit. Now we owe at card back for its convenience, so we must pay at least the minimum, charges each month on our debt chart to stay in good standing and keep the collectors off our backs. My chart shows I must pay a minimum of $468.80 per month for this purpose. So I take this off the income expected at the top.
Establish Tithing – Key to Success
Being a faithful follower of God and his son, Jesus, I come to realize that I do better monthly when I next a lot a monthly tithing. When I set this aside each month I find my budget is never short, but sufficient at months end. I wish I could do more, but for me $100 a month is what I find comfortable at this time until my debt has been paid off.
Building A Strong Emergency Fund
Next I note I have had to take out more than I anticipated with less than $100 in this account, which should be at $1000-2000 as it ensures a sense of security as I work down the debt level. You can see to the side I have set a goal for 2020, to have this fund completely restored. In so doing, I have allocated roughly $205. From my income to cover this months portion.
Identify Fixed Essential Spending
Now, I am faced with identifying and allocating funds to pay my fixed essential spending. This spending includes funds to keep a roof over my head, food in my belly, transportation and heat, phone/Internet and electricity. This leaves a balance I need for all other non-essential spending items. It tells me how much of those expenses I either need to eliminate or raise funds to maintain. NoteI include my student loan payment in this category, rather than part of the debt list, as this is a payment that MUST be paid every month and is considered essential by federal government.
Review and Summarize the Potential Outcome
Now, when I filled my oil tank for the first time following summer this past week, I saw the bill would be $402, which is impossible to budget. So I called my oil company to set up an easy payment plan going forward this winter – it will be $150 a month until next June 2020. I can than look at other things and question my reason for continuing to pay for them, and possibly find it is time to cut those costs as well.
You can see here, I have little room for fun and good times. This is one reason I continue to maintain my part-time work into retirement. It is these funds that allow me to meet my monthly budgets.
How Can You Use this Stepping Stone to Awareness to Better Prepare Your Future Personal Budgets?
Following my examples here, and charts to see how my action plan in preparing a monthly budget is a stepping stone to awareness to guide us in the direction(s) we need to go to live a life we are accustomed to, with certain modifications.
As we pay down and eliminate debt slowly we can start putting those funds back into our emergency personal fund and begin to use it more wisely to better prepare your future personal budgets. We desperately need to get back to our forefathers ritual of bartering and saving ahead for those purchases we think we need rather than relying on the instant gratification the cards we hold present us. I feel I am setting an example for how we need to live more purposefully with credit and our finances, and return to our old-fashioned values.
If you have any questions or comments on my rationale here, or the process I follow, please leave a comment below. We can all learn from one another.