Organize Your Budget

 

    You have an estimated budget.  You are balancing your checking register.  You have outlined your budget and start using it.  What else is there?  There is room to look at your savings, retirement growth, giving, and other equity like your house.

    Homes are expensive.  It may be the biggest investment you will ever have.  That is why you do need to look at what you pay in escrow.  Find out if you can pay your annual taxes and insurance yourself or if the loan place insist on having it a part of your payment.  Look at the interest you pay compared to your principal.  Let it motivate you to find a way to pay more toward the principal.  It is the only way your your will pay less on your mortgage.

    Your mortgage is the number one thing that can mess up your beautiful budget.  If the home is more than 1.7 times than your annual gross income, then you can't afford it.  Let say your gross income is 106,560 a year, then you should not borrow more than 181,000 and not worry about your budget.  The reason is that insurance, taxes, utilities, and maintenance will be pushing up the total amount of your home  If your mortgage is higher, then you will be forced to lower your budget in other areas like eating out, clothes, and other comforts.

    It is important to budget for gifts.  If you do not, then you will overspend and it will mess up your budget especially in December when you can finish the year strong.  People typically under estimate how much they will actually spend, so be prepared.  There is power in learning to control your spending.  Put a limit on who and how much you spend gifts on.  Budget in for Christmas, birthdays, anniversaries, weddings, graduations, and office gifts.  Some banks have a Christmas savings.  Take advantage of that if they do.  If not, may open a separate savings just for Christmas or all gifts.

    Automatic banking is a wonderful financial tool, but it can mess you up if you are not staying on top of your finances.  If you are able to pay off your credit card every month, then I recommend that all auto payments go on the credit card.  If you are not able to have a credit card, then take the money out of your bank register on the first.  That way you will not forget about the payment and end up paying overdraft fees.  Also look for checking accounts that have no fees and if possible earn interest.  Interest will be small, but it can be a motivator to save money.

    Almost everyone does automatic deposits into their account, so that normally helps the budget.  Just make sure you look at each and every pay stub to make sure that nothing is taken out incorrectly.  Budget your bills according to when you get paid: once a month, twice, every 2 weeks, or weekly.  If you get paid weekly, you never want your mortgage to take more than one paycheck. 

    If you are married, choose one person to be over the bookkeeping.  You can discuss it at whatever detail you choose is best for your relationship, but to avoid confusion only one person needs to be in charge.  Keep it simple.  Do not make bookkeeping more difficult than needed.  It should not take more than 30 minutes out of your week.  If it does, then there is something wrong.  If you use cash, it doesn't go into the register, but it does go into your budget.

Proverbs 13:11-16, 21:20, Luke 12:13-21, Hebrews 13:5-6, & James 5:1-6