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  • Writer's pictureErich Schwerd

Budgeting 101

by Jordan Carmack and Erich Schwerd


We wrote an article in 2014 on how to budget. Now looking back, here are the 3 key points that we find are most important when dealing with budgeting.

  1. (Identify Priorities): We understand that predicting future expenses is nearly impossible. However, it is always more effective to have a budget than not to have one. That being said, take a step back and keep it simple! This will help you better understand what your priorities are and allows you to modify to what will ultimately be more beneficial to you. 

  1. (Categorizing): Categorizing is a great way to organize your budget to better understand where your money is going. In the simplest form, this would include your fixed expenses (rent/mortgage, car note, insurance), income, and a variable miscellaneous category.  

  1. (Planning): When it comes to figuring out more dynamic fixed costs such as utilities and groceries, you will want to take into account what the previous amounts were and pick the highest of those amounts to put down on your budget sheet. For groceries, it is advised that you set a maximum expense limit for each month. If you unexpectedly reach that cap, find creative ways to work around this without going over your budget for that period. (EX: Creating new dishes with what you already have in your kitchen)

It's also important to note that for many of us, savings and investments are not at all included in the budget. The planner then makes an effort to carve out a tiny portion to put toward investments and savings to assist in generating financial stability. In a perfect world, we would first determine our savings and investment goals before determining how much of a house and/or automobile we can reasonably afford. The top line is the other issue with budgeting. We frequently overstate our income. I want to be sure that we are discussing net income when people tell me how much money they make.

We usually refer to gross pay when discussing salaries and revenues when discussing business income. Net income and take-home pay are the correct numbers to use for a personal budget.

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