Monday, January 30, 2012

Second Budget

Well, hopefully you made it through setting up your real budget just fine and were able to get all your transactions entered for the first half of the month. It’s now time to examine how your second budget might look. Remember that the Savings column can look either better or worse than it really is after the first budget. It depends on when your paychecks come in. If all paychecks are received twice a month or perhaps every two weeks, then the Savings numbers should reflect reality. However, if one or more paychecks are received only once a month, then the numbers can look good or bad depending on what time of the month they are received. In the case of our sample budget for Jack and Jill, Jill receives two paychecks per month while Jack gets one during the first two weeks of each month. This made their Savings category look really flush with money on the first budget. But as you can see below, the second budget brings the Savings back in line (with a balance of over $300) because Jack has no paycheck being deposited during this budget cycle.

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As you can also see, some other regular bills were paid during this half-month cycle. Fortunately, most budget categories held their own. However, it appears that an unexpected plumbing problem cost Jack and Jill $85 and thus put their House Upkeep category in the red. This is okay as long as no other unexpected repairs are needed in the near future. If the overall balance in their checking account remains above zero, then there is no need to panic. Hopefully, the deficit in any given categories can be made up over the next few budget cycles.

The only other possible problem seems to be in Jack’s personal money column. He’s in the red by almost $16. If Jack has at least $16 in his wallet, he is okay; but if not, he needs to watch what he spends over the next budget cycle to make up the deficit.

Cover Art

Notice that Jack and Jill did real well with their Food budget. They ended the month with a surplus of $34. As long as they can maintain this level of spending, all will be well. However, if they begin to loosen up too much and start eating out more, they could find themselves in trouble.

If you found yourselves, in your real budgets, overspending left and right, then all we say is that you must begin changing your mindset right now! We know it can be difficult going from freely spending money to spending a controlled amount. You must begin settling for less. It can be done. Many other people have done it. As you work towards your goal of reducing spending, one thing to keep in mind is that most of what we buy are things we want rather than things we need. If you were to cut your spending to just your needs, you would most likely find yourself spending much less than you are taking in. So, whenever you find yourself wanting to make a purchase, evaluate the necessity of the item and how the purchase will affect your budget’s bottom line. If it’s not really needed and your budget can’t handle it, don’t buy. Keep working at this until the lower spending amounts just come natural to you.

In the next post, we’ll give you a few tips about controlling spending in case you continue to have problems.

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