If you think the fall is just the time of year when you get to taste your favorite pumpkin spice latte, you’d be wrong. Not only is this popular flavornow available nearly every month of the year, but the fall also marks a very special time of year. With only a few weeks until winter, it’s a season of changes as the natural world prepares for hibernation.
You don’t have that luxury. As much as you’d like to retire to your basement for the next several months, leaving only to relieve and refresh yourself, real life needs you to Adult™ all throughout the year. You can’t blame the changing seasons for your lack of money management anymore than you can cite autumn as a reason to stay home from work.
In fact, you need to pay special attention to your budget now more than any other time of year. Your annual home winterization can eat up a lot of extra cash if you need to make repairs. You won’t have much time to recover from these costs with the holidays just around the corner promising a very expensive way to spend time with friends and family.
Your budget is the MVP of financial tools this season. It’s the only way you can balance the cost of major upgrades to your house and the cost of spoiling your family this year. Don’t let the season’s biggest events distract you. You need to spend some quality time with this tool before you can enjoy Halloween, Thanksgiving, and even Black Friday to their fullest.
Before you let Netflix auto-play the next episode of The Defenders, you need to take a step away from the screen to work on your budget. Luckily, you won’t have to ignore your favorite superheroes for long. You can create your very first budget in no time at all as long as you keep in mind these 3 important things.
- The difference between net and gross incomes
A successful budget relies on how accurately you tally your income and expenses. If you don’t provide the most precise number for either of these categories, your budget will never work to keep your spending or savings on track.
Don’t make the mistake of using your gross income when first creating a budget. This number is how much you make before any taxes or deductions come out of your pay. Depending on your insurance and tax bracket, your net income could be a lot less than your gross.
When you use your gross income as the foundation of your budget, you’re setting yourself up for failure as it relies on an inflated sum of money you won’t have in your bank account. If you use it without realizing your mistake, you could spend more money than you ever had to begin with.
- The value of goals
A budget is the ultimate barometer of your finances, letting you check in with where your finances stand. Once you can compare your expenses to your income in black and white terms, there’s no mistaking bad spending habits that hurt your chances at saving. It’s more than that, though.
A budget can act like a compass directing you towards goals. Once you tally your comings and goings, you can identify areas of your budget that can be repurposed to reach these goals. For example, if you notice you order take-out several times a week, you can cut this habit out of your life and reroute the cash towards a vacation. Your solution may not be as simple as this example, but a budget makes your task much easier.
- The importance of balance
As much as we’d all love to pour cash into savings instantly, it’s not always within our financial capabilities to do that. When you first start using a budget, you may be putting out too many financial fires to devote much (or any) of your paycheck to savings. The important part is that you try.
Some experts recommend setting aside roughly 10–20 percent of your net income and split it equally into savings, retirement plans, and debt reduction. This formula should help you reach your goals and cover any emergencies without too much stress.
At the start, you may only be able to put 1.5 percent of your paycheck into these categories. While better than nothing, this won’t help you cover emergencies, like when a sudden car breakdown or household repair comes your way.It’s important to learn about online borrowing solutions as you work out your balance sheet so you can be prepared.
As you wait to build up greater savings, a direct lender can provide a small dollar loan that covers these one-time emergencies. No one likes borrowing money to cover essential bills or repairs, but some lenders make the experience a little more palatable with easy, no-fuss online installment loans. They’re a convenient and quick way to cover cash flow shortages. Compared to conventional lenders, which can take too long to review and process your application, these installments loans are perfect for time-sensitive bills with tight deadlines.
Don’t let the simplicity of these 3 aspects of your budget fool you. Though straightforward, they’re incredibly important things you need to consider before you create a budget strong enough to withstand the expensive weeks to come. Keep these in mind as you table your very first fall budget, and see how easy it is to stay on track of spending.