Chapter 68: Personal Budget
Erika Torgeson
Budgeting can be a scary word for some people and create strong emotions such as saving for the future or feeling too restricted. Budgeting involves analyzing your income and expenses so you can see where your money is going and making adjustments when needed to avoid debt. At first budgeting can seem complex or time consuming, but once you have gone through the basics, you will find it gets easier and it can be a very valuable tool for controlling your personal finances and increasing your wealth.
Let’s cover some basic information that seem to come up through social media or conversations with friends and family:
- Debt is not something that is a normal part of life – it just seems that way. The normalizing of debt is misinformation that has been passed down for the last few generations due to the increase in how and where credit can be used.
- Budgeting is not about restricting how you live your life, but how well you can live your life.
- Budgeting can seem daunting at first, but there are many different styles and ways people will budget their money (Personally, I follow a Zero-Based Budget because I absolutely hate tracking every little purchase I make).
- There are several people through social media that opening discuss how they budget, walk you through how they create their budget, along with struggles they have encountered when they blow their budget. Instagram and Pinterest are great places to start and you can just search “budget.”
Think for a moment when the last time you compared your monthly income to your outgoing expenses? Are you confident about your spending habits and established savings goals for purchases you would like to make in the future? Or, do you feel that you run out of money before the end of the month and cannot seem to break the cycle of living paycheck to paycheck? Understanding where you want to be financially in the next few years will take some assessment of where you are today, financially. It is having the “talk” with yourself about where your money is going and being honest about your spending habits.
Activity 68.1: Budgeting
Expenditures Amount in Dollars
| Tuition and fees (1/12 of annual) | |
| Textbooks and supplies (1/12 of annual) | |
| Housing: monthly mortgage, rent, or room and board | |
| Home repairs | |
| Renter’s insurance | |
| Property tax | |
| Average monthly utilities (electricity, water, gas, oil) | |
| Optional utilities (cell phone, Internet service, cable television) | |
| Dependent care, babysitting | |
| Child support, alimony | |
| Groceries | |
| Meals and snacks out (including coffee, water, etc.) | |
| Personal expenses (toiletries, cosmetics, haircuts, etc.) | |
| Auto expenses (payments, gas, tolls) plus 1/12 of annual insurance premium—or public transportation costs | |
| Loan repayments, credit card pay-off payments | |
| Health insurance (1/12 of annual) | |
| Prescriptions, medical expenses | |
| Entertainment (movies, concerts, ni