Money Talk for Women

Achieve Your Dreams…. Start with a Budget!

by Monica Rasso, Regularly Contributing Author at Elegant Plus Magazine

Both large and small dreams begin with budgeting. Whether you are looking for some great new fall accessories or need to save for your dream house, a budget is a great place to start.

People often shy away from the term “budget.” That simple word can evoke a feeling of fear in many people. Why? For the same reason most diets do not work: sacrifice. If you have to save now, you can’t have what you want right now. However, budgeting can be done without pain. You may not have to sacrifice now. There is no need to feel the hunger pangs of going without the things you want.

A budget is simply a plan for your money. Just like the care you put into planning your wardrobe the night before work, here are a few steps in planning your money with just as much attention to detail.

1. Find your “why.” Why do you want to save? Are you saving for a particular event or purchase? What does that event or item mean to you? 

2. Discover where your money is going currently. First, figure out how much you have to spend on the fixed expenses such as rent/mortgage, car payment or any other expense that requires a fixed dollar amount each month. These payments are not flexible. Most advisors would then say to figure out where you are spending the rest of your money. I say go to step two.

3. Plan where you want to spend your variable money. If you would have looked at where your extra money is going now, you’d probably start kicking yourself for spending $4 on a smoothie at Dunkin Donuts everyday (ok, so maybe that’s just me). I say, plan where you want to spend your money and stick with it. With the money you have left after fixed expenses, you plan for what are called the variable expenses. These type of expenses will change from month to month. Variable expenses are what you spend all the rest of your money on after the fixed payments are paid.

4. Organize your money. How do you keep from overspending? If you are computer savvy, the best tool that I have seen to help stick to your plan is a program called Microsoft Money. You can set up the amount you would like to spend in each variable category per month. Every night (or week), enter your receipts into the program and select the proper budgeting category. You can quickly see if you have gone over your predetermined allowance.

5. Create separate accounts. Open a checking account for use on your regular expenditures. Open a savings account that is to be rarely, if ever, touched.

6. Use direct deposit. If your company offers direct deposit, use it. You can usually allocate how much money you would like to go into each of your accounts. A smart plan includes selecting a certain dollar amount or percentage of your paycheck to go directly into savings. This should be in addition to any retirement accounts to which you already contribute. Since the money is taken out of your check before you see it, you probably won’t miss it. If you don’t have direct deposit, when you go to the bank to cash your check, put a certain amount into savings each month.

7. Re-evaluate every six months. Can you start putting more into savings without feeling like you are painfully sacrificing? You may start looking at investments that pay better interest than a simple savings account, such as a CD or mutual fund.

After you have created your budget and successfully saved, you should take a moment to celebrate your success. Take time to reflect on the reason that you developed your budget. What was your “why”? When you see the money piling up in your savings account each month, you will be sure to smile. Take time to reflect on your success and be proud that you set a goal and were able to stick to it.

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