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Improve Your Finances

by Daria Stellwag |

Budget. Use a spending plan for your income and expenses over a defined period. This
handy tool should be your best friend when it comes to the management of your money.
Let’s get you started. First decide on how you will maintain your budget; pencil with
paper, spreadsheet (Microsoft Excel, Google Sheet, Libre Office) budgeting software
(EveryDollar app, YNAB, Quicken.) Once the decision on how/where you will maintain
your budget has been made, it’s time to decide what needs to be tracked in your
That’s easy: Every penny that you earn and every penny that you spend. Set up your
budget based on your expected income for a period, let’s use one month, then subtract
your expected individual expenses for that same period until you’ve given all the money
you expect to receive a job to do. This popular budgeting method is called Zero-Based
Budgeting. Note: you allocated every dollar; you didn’t spend every dollar (some will
likely have been allocated for savings.)
What a budget does is provide you with guidance. A budget is a tool that, when used
properly, will keep you focused on how your money is being spent. Remember at the
beginning of the month you used a Zero-Based Budget to assign every dollar a job to
do, meaning you told your money what to do. All you must do at this point is to spend
within those allocations.
What about expenses that only occur once or twice per year, things like property taxes,
vehicle registration, some insurances, subscriptions, etc.? To find those monthly
amounts divide the total amount by 12 and use that amount in your monthly budget.
Example: Vehicle registration: $300 annually – divided by 12 months = $25 per month.
$25 per month is the amount that would go on your budget under the category: Vehicle
Expenses or Vehicle Registration.
Perhaps there are only 6 months left from the time that you start your budget until the
time that your vehicle registration is due, then you’d divide by 6 months instead of 12
months or $50 per month would need to be added to that budget line item for the
remainder of the year. (For larger purchases i.e., vehicles, homes, college tuition you’ll
need to break the cost down over several years, then months to get your monthly target
savings amount. Example: $30,000 car goal in 5 years. That works out to be $6,000
per year or $500 per month for 5 years.)
Bam! Just like that you’ve learned what a budget is, how to set it up, and what it
provides for you – control of your money. Need additional assistance getting your
money to work for you, let’s talk.

Daria Stellwag
Financial Coach