It has been a whirl and we are just in the second week of the new year. The news is very depressing, and I am feeling a sense of déjà vu – is it 2020 all over again? I certainly hope not and to get my mind off these ominous thoughts, I worked on my financial goals for the year when I had the chance (which is usually after work or while I am eating lunch).
So let me take your mind off Covid for a moment and let us talk about money. It is always an exciting time to review where you want to be financially beginning of the year. I can share how I do my budgeting. Caveat: I am not a financial expert but will share what has worked for me over the years.
For those whose goal is to be debt-free or just simply manage your finances, this is where you need to start. Budgeting is the key. There are tons of articles already written about this and you need to determine what works for you. Read Dave Ramsey’s 7 Baby Steps if you need help determining goals. It may take time, even years, but be patient. It took us years of practice mingled with frustration and curbing immediate gratification. We were finally debt-free in 2018 except for our mortgage and student loans which are main target now.
So how do I do it? I have a high-level monthly budget on my Excel sheet for every dollar earned and spent. I follow the Zero-Based Budget approach, which funny enough I just learned last week. I did not realize this is what I have been doing for years. Then I use Quicken to track my expenses, but I do it manually since I look ahead – far ahead.
This year I want to be more intentional on where our income should go this year, so I created a 5-month forecast instead of my 2-month forecast. There is nothing special on the number, but I wanted to get a view before summer starts. I am overly optimistic that somehow this year is going to be better and will look more like our pre-pandemic years. I included vacation category in my budget so as a unit, we will be more careful about impulse buying on items we do not really need (meaning less trip to Costco!) as well as limit our dining out options (we are a big foodie group). I am robbing Peter on this account so Paul can save 😊. We have everything accounted for and we just need to stick to it as a family. If the vacation does not happen, then it will be a plus to my savings account.
Then I check Quicken at least once a week (in reality, 3x) and adjust, as necessary. Oftentimes there will be things that will come up, emergency or otherwise. Over the years I learned how not to fret and balance it with the YOLO phrase. Then I tell the family that next week or next month, we will not be doing this or that.
Budgeting is a work in progress and requires long term diligence to see effective results. If you have not already done so, try to work on a monthly budget to see where you are. It is the first step to achieving financial freedom. If you have questions, let me know where I can help.
I hope this post has been helpful. Drop me a comment if you would like to know more about our experience towards financial freedom.
Vian Wheatley 