Budgeting is simply being prepared

Wayne Lefor – Financial Planner, JK Harris Advisors, LLC

Most people have a grand plan for themselves. It usually involves making lots of money and living happily ever after. Unfortunately, that grand plan doesn’t pan out for everyone, whether you make lots of money or not. There are usually some unexpected events that pop up and spoil even the best of plans.

Now the question is, how do you prepare for the unexpected?

You budget, of course. You see, a budget is nothing more than a financial plan for spending. Budgeting is a fairly simple process that involves these six steps: establish your goals, estimate your monthly household income, estimate your monthly expenses, balance the budget, put you plan into action, and adjust the budget as necessary.

I know what you are thinking. You’re thinking, “OK, what’s so simple about that?”

Well here are some tips that can help make budgeting a little easier.

• Keep it simple. Don’t detail your plan to the penny.

• Be realistic. Take into consideration all expenses, including vacations, spending money, alcohol, tobacco and hobbies. Overestimate your expenses and underestimate your income.

• Don’t expect someone else’s budget to work for you. Tailor a spending plan to your individual needs, not to something you see in a newspaper or magazine.

• Distinguish between wants and needs. Buy what you need first. The wants belong in the “what’s left over category.”

• Borrow with care. Even though it might give you pleasure to own something right now, consider all the interest you’ll be paying and as yourself if it’s really worth the price. If possible, use cash for ALL of your impulse purchases.

• Plan for and develop an emergency fund. This is perhaps the most important element of them all.

If you can follow these steps, you can develop a successful budget.

Wayne Lefor is a Financial Planner with JK Harris Advisors, LLC, which is an affiliate of JK Harris and Company, LLC. JK Harris Advisors provides financial planning services to help clients identify, establish and achieve their financial goals and objectives.