Budgeting Your Money: Seeing the Forest through the Trees

by David Bakke

budgeting your money2 I sincerely enjoy listening to people. Some may call it eavesdropping, others could call it rude, but I really enjoy listening to other people. I am never disrespectful and never invade anyone’s privacy, I just like listening.

And one thing that always amazes me whether I am at a store or at work or wherever, is the amount of people who always seem to have financial “emergencies”. Or they have things coming up and they don’t know how they’re going to pay for them.

It’s one thing if you get in an accident and your car is totaled and you have to buy a new one, but I am really not talking about these types of situations.

What I do hear is things like “my tag renewal is due next month. It’s $300 and I have no idea how I’m going to pay for it.” Or “My car needs a new such and such-where am I going to get $200.” The best one that I hear is “Man, this Christmas shopping is just killing me!”

The point I am trying to make is that really, NONE of these should be any type of financial emergency for anyone.

When I was digging myself out of my financial mess, I used to laugh when people told me I needed to have 6 months worth of expenses saved up as an emergency fund. I thought they were crazy and honestly, it was the last thing that I did during that journey to financial health. I originally thought it was stupid, and I also thought it was more important to get out of debt than it was to have money just sitting around for a rainy day.

Well, if you are at the point where you are doing better than living paycheck to paycheck, it is time to start looking at some of your finances with a yearly perspective.

A few quick examples:

1) I know that my auto insurance is due every six months, in March and October. I know it costs around $500 each time.
2) I know that my tag renewals are due on my birthday, and it costs around $200 each time.
3) And finally, I know that Christmas comes every year, and it comes in December!

So you see, NONE of these will ever be financial emergencies for me and they shouldn’t be for anyone else. All of these things have a significant effect on my monthly expenses during the month they fall in, and I do what I need to do to make sure that I have the money for them. My auto insurance costs me approximately $85 per month so I know that I need to set aside about that much money each month so I’ll have it when it’s due. My tag renewals are only $16 a month, but I know they fall every September, so I make sure I have enough for that. And Christmas shopping is a big one. I usually start to put a little aside each month starting around July, but I also start looking for items around July too. If I see a great price on something in August that I know will make a great Christmas gift, I pick it up. This goes a long way in taking the financial sting out of the holidays

If you can begin to look at your overall money picture in a yearly perspective, and know what you have coming up in which months, your financial “ride” should be much smoother.

Comments on this entry are closed.

Previous post:

Next post: