What's in Your Budget?

Sure, we've all seen or heard the "What's in your wallet?" commercials.  Still, an equally important question remains: What's in your budget?


Not many people could answer this question.  Why?  Because many people do not have budget in place.  There are several reasons why one may not have a budget.  Perhaps they are not sure how to create one, just don't know where to start or unsure of what to do with a budget (or how to use it).

This guide will help in understanding and getting started on creating and learning how to maintain a budget or expense plan.

What is a budget?

A budget (a.k.a. expense plan) is a plan used to decide the amount of money that can be spent and how it should be allocated.  It's purpose is to account for all available funds as well as itemize expenses.  A budget is a great informational tool that can be used in many situations and assist with everyday accounting.  It can (and should) be updated as changes come along, as they often do.

Who should have a budget?

Everyone should have a budget; no matter the income/tax bracket or indebtedness.  Each individual with income and/or spending as well as a separate combined household expense plan.

Why should I have budget?

It is important to create and keep a budget because knowing exactly how much money is coming in and flowing out will help you to:

*become and (hopefully) remain more organized.

*notice where changes can or should be made.

*keep up to date with bills and stay creditworthy.

*detect mistakes, identity theft, or potential fraud.

*save money!


When should I make a budget?

Make a budget now and review it often.

As life happens and changes occur, update and adjust your budget.  This may be as:

Income Changes
 -pay rate increase (promotion, career move, merit raise, additional employment, etc...)
 -pay decrease (demotion, job loss, layoff, cutbacks, retirement, etc...)

Additional Debt is Incurred
 -new purchases (car, home, laptop, groceries, gas, etc...)
 -emergencies (medical or otherwise)

Decrease in Debt/Obligation
 -lowered balance by a little or by a lot (monthly payment, principle payments, overpayments, etc...)
 -satisfied obligation (paid off balance, settled for less than full balance, etc...)


What do I need to include in my budget?

Everything. 
Seriously.  All incoming and outgoing funds need to be included.

Income
Every bit of income received from all sources should be listed.

This may include: employment (paystubs, W-2, 1099), unemployment (paystubs,1099), retirement (statements,1099-R), pension (statements, 1099), disability (award letter,statements), worker's compensation (award letter,1099), dividends paid, rental income, earned interest (1099-INT, statements), business income (balance sheets, receipts), rebates/refunds/rewards (1099), and several other sources.

Include the source, gross amount (before deductions), net amount (after deductions), and frequency.

Debt
All debt listed on credit reports should be listed.

This may or may not be painful, but all open accounts (including zero balances with available credit) need to be included along with the minimum payment amount, balance, and credit limit.  

It may also be useful to include the APR/Rate being charged and the opening date of each account.  (The use for these pieces of information and credit will be covered in a separate post- subscribe for updates and new posts.)

Expenses
Each household bill, any other obligation and all other expenses should be listed.

Expenses are different for each individual depending on a number of factors. Keep this in mind as you make your list of expenses.  Try to think of everything you do in a day.  Include every purchase made, toll paid, donation to charity and everything in between.  Many daily or monthly expenses are overlooked when creating a budget.  For this reason, it is important to ask for and keep receipts (even for cash transactions).  If you are just not good with receipts: keep a transaction register or notepad handy.  Cell phones are also a good plCollect information for full calendar months and/or years to get an accurate picture of your total spending.  

Assets
Assets are things of value that are owned. 

Liquid Assets can be converted into cash quickly and easily.

Non-Liquid Assets are not as quickly or easily sold and converted to cash.

(Liquid and Non-Liquid Assets should be listed but kept separated.)

**Some stocks, bonds and retirement accounts can be considered in either category depending on several factors

*These examples are for illustration and are not meant to be all inclusive.*

What's Next?
Now that you know what you need to have in your budget (your entire life - on paper) and have it all gathered in front of you, the next step is to put it all together into an easily readable format.

Subscribe or check back for the next segment: "How to Plan and Create a Budget".  

Are You Literally Throwing Money Away?

How often do you open all of your mail?

Bills, statements, advertisements, unsolicited "Junk" mail....

If you open all of it daily- Great job. Keep it up!  But as for the rest of us, we need a bit of motivation and organization in our lives.

Until very recently, I would let most of my mail pile up.  After a bit, I'd get sick of it sitting in a huge pile that my dogs kept getting into and shredding ALL OVER my house (they love to tear up and chew on paper) and would finally sort it and read it.

My mail sorting works pretty much like this:

Bills/Statements 

"Better open these now."

'Other' Bills & Stuff 

"Ahh. Later..."

Advertisements/Flyers/Offers

"Oh, maybe I should check that out." 

"Wow. Big Boy is still around?"

Coupons

"Ooo. I'll look through these later."

Other unsolicited envelopes  

"Junk."

(Yes, I do actually say these things while sorting my mail.)

Normally, I would just throw away/recycle the pile I deemed to have been junk by looking at the envelopes.  But this time, I decided to open all of them and I was surprised at what I found in one.

Look what I almost threw away:

It's a survey from Scarborough Research with a (real) One Dollar Bill as a token of their appreciation and promise to reward participants with $5.00 cash for completing and returning the (extremely short) one page survey.

As I finished reading the letter, I wondered how many of these types of letters containing money are thrown away every day.  Can you imagine?  

Think about it; how many random envelopes have you or I tossed away without ever opening-maybe even tearing up?  They could possibly have had cash or a check inside.

Then I wondered if it was some kind of scam.  So, of course, being myself; I turned to my good friend Google and started researching the company.  

It turns out Scarborough is, in fact, a legitimate survey research company.  

So I filled out the super quick survey and sent it off.

I read a bunch of comments online complaints about how these people bother them by calling.  My guess is the people that complain are not letting these folks get a word in long enough to say that it was a survey and not a sales call, if they even answered the phone.

I did end up receiving the $5.00 reward shortly after sending out that survey.

(Awesome!) 

Scarborough called me to take a survey about music stations I listen to and the like.  It took about 20 minutes (with technical difficulties).  I received an additional $5.00 in cash for this.

They didn't try to sell me anything and they weren't rude or annoying.  They even left a detailed message when I was unable to answer my phone and waited a few days to call back.  They just wanted my opinions and they're giving me money for it!

That is fantastic!

*Participating in this type of research can help to improve: products, services, activities, and many other things that we use everyday.  It doesn't cost but a few moments of time but can be so helpful.

It is an added bonus to be rewarded.*

And just think; I almost threw that envelope away...

Lesson for today: Open your mail before shredding, recycling, or throwing it out.  

You could literally be throwing money away.

  

Got Coupons?

Happy Mother's Day!  This post is in honor and remembrance of my late Mother.  She was the most wonderful, caring, intelligent woman I have ever known.  And I hope that I can live up to her likeness.

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My mom was known as the "Coupon Queen".  Because if you saw her collection of coupons or the amount of stuff she got for free or at an extreme discount, you would bow down.  She was a very savvy shopper and got the most- for less (or free).  At times, stores would even owe her a credit and she'd leave with a full cart and a few cents or dollars richer.  

How awesome is that?!

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My mother taught me a lot about how to get the most- for less.  When I was a child, she would pay me (a small convenience fee) to cut her stack of coupons.  After they were all cut out, she would separate them into categories, then organize and file them by expiration date.  As mama made her shopping lists, she would review the sales ads, then consult her coupon box.  She would keep her lists and coupons together and place them into her "handy-dandy coupon wallet" (which was always with her).

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Loyalty/Advantage/Bonus/Store Discount or Points Cards were a given.  If it was free, it was hers and she would use it- always.

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Rebates were another of my mama's favorites.  
She would purchase things (sometimes things that we didn't really need) then send the receipts along with a form and the product UPC's off through the mail.  A couple weeks later she would receive postcards and checks reimbursing her for those purchases.  

Mom would often use her coupons on top of the rebates, which meant that the rebate coming back may have been for more than she actually paid.

Score!

 Free stuff and cash back.

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If something that was on my Mama's list was not available or out of stock, she would get rain-checks. Most places do not advertise that they offer rain-checks, but many do offer them if an advertised sale item is temporarily out of stock. 

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"Mama Don't Play That"
I learned fairly early on that Mama means business.  Long ago, if I was being a difficult little brat while we were out, my highly agitated mother would remind me (with a stern, yet fairly quiet tone and a signature look) that I needed to pipe down-immediately.  And most times, I would.  But sometimes.... not so much.   She had several tactics and techniques.  With them, she taught me to listen - eventually.  (I wasn't quite the world's greatest kid/adolescent.)

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I have to say, with what she had and all she worked for, my Mother did a pretty great job handling just about everything that came her way.  She has done so much for all of us, her 5 children, with a majority of the time, by herself.  Even though she is no longer physically here, she lives in our heart, our memories, and in our actions every day.  

My beautiful mother holding me as a baby.

I hope that my mama's lessons help you to save too.  I credit my mother in large part for my awesome ability to make well thought out and researched purchase decisions after shopping around for the best deal.

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Happy Mother's Day!