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Achieving Financial Freedom Through Budgeting

What is a Budget?

The Money Nerve Budget

Many people consider budgets as a negative part of your financial plan. Let’s take a second look! A budget is a marvelous tool for calculating the money flowing in and the redistribution of that money to live your life in the best way possible. A budget can help you with money choices today, decisions in 6 months and a plan for when you no longer work. Knowing where your money comes in and goes out will help you formulate a manageable budget that can accommodate several goals.

Best Practices

  1. underestimate your earnings ( be sure to jot down after tax dollars, not your salary)
  2. Overestimate annual expenses; because “things happen!”
    Of course, some parts of the country have a low cost of living, and other areas have a much higher cost of living. You will need to take into consideration as you formulate your budget.

First, determine how much you want to save. Pay yourself first. You may only save $25 a week, and that’s okay. If you set up an automatic draft, it is not as painful, because it goes straight to the savings account. Then when you get a raise, set up a second draft and route money to a long term savings account. This cash can be used to purchase property, save for retirement or other long term goals you have set.

Where does My Money Go?

It is easy to find the average wage and cost of living by each state on the Internet. Since I live in California, let’s use those numbers.

According to the MIT Living Wage calculator, an adult with no children in California needs a living wage of $30,392 before taxes. This salary covers the essentials of housing, food, utilities, transportation, and taxes. There are no luxuries at this salary without some creative methods of saving/spending.

Housing will take the most significant bite out of your income. As a general rule, you want to spend no more than 30 percent of your monthly gross income on housing. If you’re a renter, that 30 percent includes utilities, and if you’re an owner, it includes other home-ownership costs like mortgage interest, property taxes, and maintenance.

Food costs also vary, but a good rule of thumb is to delegate 12% of your salary toward food. Again food prices by state and even by city: New York, Chicago, Los Angeles, and Seattle will be higher. You may want to utilize supermarkets that specialize in overstock or day-old bread. Another option is to cherry-pick Costco or Sam’s for some of their brand name, big bulk items like coffee, nuts, frozen vegetables, and even gasoline. Include groceries, eating out, and liquor when calculating the total food bills.

Adding a small child can add $220-$250 per month to that %. The USDA has prepared numerous food plans based on a thrifty budget to the most expensive of budgets. With careful planning, you might be able to spend as little as 9% on food costs. But, if you prefer to eat out regularly or purchase high-quality meats and organic produce, you could triple your bill. Click HERE to see the graph for January 2019. It is all centered on what is important to you. You may prefer to live in a tiny home and dine like a king. Or you may live in a large house and eat tuna fish every night. We all have different wants and needs. Your budget should be a reflection of what is most important to you.

Budgets Create Financial Freedom

When you have set your budget – follow it. As you accumulate wealth, you will see how mindful money choices can create financial freedom. You no longer miss payments or pay numerous late fees which results in more money in your pocket. Take a chance on you! Create a path for your finances, check every year and invest in YOU! I invite you to download this easy budget and get started TODAY!

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3 Tips for Overcoming Emotional Roadblocks

Financial Roadblocks
Negative vs. Positive: How to create positive financial decisions when plagued by negative emotional experiences regarding money.

Negative actions, words, or lifestyles have a more significant impact on your brain than the same number of positive interactions. Why is this? Being criticized, rebuked, or corrected in a spiteful or consistent manner can demoralize us. And we often allow those old, but powerful words to autocorrect ourselves again and again – resulting in repetitious and unsuccessful outcomes.

Emotional baggage can derail our financial goals and visions too! Dealing with money is going to be part of your life tomorrow, next weekend, on your vacation, and even on your birthday. Facing your emotions regarding finances is the first step. There is no physical harm in facing your financial reality. No one yet – has ever been stabbed by a bank account!

Emotions can cause us to feel panicked, afraid to make decisions, to plan for the future, to ignore our problems, and take away the freedom of conscious choice. When we are worried about the heights to which we can ascend, it often feels more comfortable to lower our expectations quietly. So how can we change this emotionally charged way of thinking into a more rational and proactive method of moving forward?

First, examine which negative voices or memories are affecting your finances today. Determine how these negative fears or choices are affecting your personal life. Explore who might be a financial champion (coach or teacher) to assist you in making changes.

Second, write down a logical plan of action to follow. Assess where you are financially right now! You can’t get to your ultimate destination if you don’t know your starting point. Take a good, hard look at your income, expenses, budgeting, time, and hidden costs. See where your money flows into your life and then out. This action plan is not a time for self-judgment; it is just a tally of the financial “flow.”

Third, begin writing in a journal daily. Protect your dreams. Choose a short-term, mid-term, and one long-term goal. Life is full of extraordinary opportunities, and writing down your most profound thoughts, and goals can propel you more quickly into seeing those dreams become a reality.

These three tips can reroute your financial journey and create a healthier relationship with your money!