Creating your Household Budget

So you made the New Years resolution of setting up a household budget and sticking to it. But where to start? We created our basic household budget worksheet that is easy to follow without a whole lot of graph’s and complicated data entry.

To get things started you will need to pull together all your recurring bills and your latest bank statement. We found by simply looking at our last bank statement our budget was totally wacky because we never realized how much we spent on “Miscellaneous” expenses. Our regular recurring expenses like mortgage, car payments, insurance and utilities were always they only bills that came to mind.

Some liberties we made as we created the worksheet we assumed everyone gets paid bi-weekly so there are three pay periods to address an additional pay cycle during that odd month. The worksheet also uses the principle of paying yourself first so the very first expense you pay is into your savings to build an Emergency fund. Your emergency fund should equal 3-6 months of your month income to provide funds in the case of an unexpected illness, job loss or other large expense such as the transmission going out in your car. Most feel a credit card is an emergency fund and end up pay enormous amounts in interest.

Download Template Here

Next is your ongoing household expense that include your Mortgage / Rent, utilities and home maintenance. Notice we did not include revolving debt such as credit cards and student loans. These are categorized in the miscellaneous category because our goal is to become debt free.

Transportation is the next category followed by daily living expenses to provide categories to isolate each expense. All the data entry is fairly straightforward to created a method to track your expenses and give every dollar a name. At the end of each month the ending balance will carry over automatically into the next month.

Last category is the miscellaneous expenses and this is where most waste our hard earned money. The goal is to have this category with a $0.00’s because this is where you can start to build long-term wealth.

We hope this annual budget worksheet is helpful as you pursue financial independence and become the money manager for your family. Download Template Here

Thanks,

Shane

February 22, 2017March 3, 2017

Setting your Financial Goals

Developing your Financial Goals but where to Start?

First and foremost congratulations for taking control of your financial future. Too many families are stuck in between paychecks and are relying too much on credit cards to make ends meet. Do you see a endless stream of money going out and not enough coming in? As you starting to think about setting your Financial goals but not sure where to start? Download our Financial Goals worksheet and follow the steps outlined below. Are you ready to make the exploration into your financial security? Is it time to take control of your families financial future? Lets get started!

First is to really think about your short and long term financial goals. In our file Financial Goals Worksheet we breakdown the elements to consider when developing you long term financial plan.

We created our Financial goals worksheet file as a memory jogger to help walk your through the process of creating the framework for your financial plan. As you go through each category set your goals without limiting yourself within your current budget. Our Financial goals worksheet has six exercise's:

Financial Goals worksheet

Savings Goals worksheet

Daily Expenditures worksheet

Asset worksheet

Income worksheet

Expenses worksheet

Here is a example of the Financial Goals worksheet

Our first two worksheets are designed to provide the framework of your goals of what you want to achieve and to create a vision. Saving goals worksheet focuses of setting up your short term and long term savings goals. Some short term savings goals can be setting up a Emergency fund, buying a home, a car or setting up a college fund for your children. Do you have a plan for that unexpected car or home repair? How about the unexpected dental or medical expense?

When you start thinking about your Long Term Saving goals that are really focusing on your retirement savings and the income it will produce and for how long. Do you know how much income you will need? Do you expect expenses to go up or down? Will your dollar still have the same buying power?

The balance of the Financial Goals worksheet really focuses on Cash Flow Management because without managing your cash flow no matter what goals you establish they may never be achievable.

Do you know where your money is going? This is where the rubber hits the road so we created the Daily Expense worksheet to highlight your spending habits:

Now lets start the Asset worksheet to help you visualize all the money you have into a simple worksheet that breaks down where your money is deposited. First look at your money in taxable accounts that's typically Checking, Savings, CD's, Stocks and Bonds. Next we have tax deferred accounts such as your 401K IRA and annuities. And lastly the tax advantaged accounts such as your Roth IRA, cash value life insurance, 529 college plans and Municipal bonds. Here is an example of our asset worksheet:

Now lets look at your sources of income. Are you an employee or self employed? Our Income worksheet walks you through determining your net income and the source. For example you are a w-2 employee with taxes and other deductions withheld from your check. How are you paid weekly, bi-weekly or monthly? Enter the data from your paystub and the worksheet will auto calculate your estimated net income. here is an example:

This is where the moment of no return happens as we examine your expenses. The question "Do you know where your money is going"? will rear it's ugly head. It's meant to create the question "Do I need every cable channel under the sun" or "Do we need eat out 4 times a week". Our goal with this worksheet is for you to examine where your are spending money and where you can save money. It's meant to create the process of finding more cash flow within your own household budget. Here is an example:

We feel the goal for analyzing your debt is to begin the process of becoming debt free but what debt should tackle first? Things to consider is the amount and the interest rate. To create a winning attitude tackle the smaller debts first and as each is paid off roll that total payment to the next debt. It will take time, patience and determination but you can't accumulate assets until you are debt free.

Lastly is the Financial Summary worksheet of your goals in numbers to visualize your financial future and what needs to be addressed to meet your goals.

One of the most important item's to address is your family prepared for the unexpected loss of income? What would happen if you could not work? Do you have the financial protection to insure your families dreams are not lost in the event of loss of income? We do not insure life's but we do insure your families dreams.

February 22, 2017December 17, 2017

Building a Strong Financial Foundation

What do I mean by Building a strong Financial Foundation? Just like when you build a house you need a strong foundation anchored to the ground your financial foundation is built on proper protection.

Proper Protection protects you and your family’s hard earned savings for unexpected health issues or premature death. One of the most critical aspects of proper protection should include Long Term Care. A very cost effective way to include Long Term Care protection is to add a rider to you life insurance policy.

The next critical item is the need to address your debt liability and eliminate your debt. If you do not address your debt you will never be able to start to build your long-term savings.

When we talk about creating an Emergency fund you should set aside 3 to 6 months of your income to manage the unexpected expenses such as repairs to your home or car. With today’s economy it’s even more critical to have an emergency fund to address the unexpected loss of income due to job loss.

Once you have the foundation built you can its time to create your portfolio of long-term savings for retirement. Things to consider are how much income will I need during retirement. Some variables to consider are inflation and taxes. Do you feel the dollar will have the same buying power as today? Do you think taxes are going to go up or down? You may ask how much should I save? It really depends on how you want to live in your retirement years. Do you want to watch your dreams on TV? or Do you want to live your dreams? A rough average number is between 15-20% if you want to continue to live the life style and with the same comparable income during your retirement years.

Now lets look at how a lot of families are trying to save for retirement. They save what’s left after paying their expenses or invest a few percent into there 401k. But when an emergency hits they take a loan against there 401k.

This scenario unfortunately is basically the norm for many families today. They are living paycheck-to-paycheck just trying to make ends meet. Most are straddled with huge amounts of consumer debt and try to save what’s left over. When an emergency hits such as the car needing a new $2000.00 transmission they rely on credit cards. Its like a spinning top that barely keeping it’s balance.

Having proper protection and debt management are the foundation to build financial freedom. Ask yourself “Do I control my money or does money control me”? If it’s the latter its time to take control of your financial future. A good place to start is our Financial Goals worksheet down load it here. Here is a link to our post Setting your Financial Goals its a great starting point to begin taking control of your financial future.

Good Luck and Happy Saving!!