I think most of us have at some point in our lives. Some how we forget to feed
little piggy. And, like most neglected “pets”, your piggy bank will disappear if you don’t feed it. A personal budget is important to create financial independence and setting goals for feeding that “piggy bank” should be an important part of your budget! The most successful financial plans allow you to INVEST IN YOURSELF! It just makes good sense. A plan to build financial security should always be considered essential to any budget.
Even if you’re on a plan to reduce debt, you need to include plans to build a foundation for future financial security. A good savings routine and variable expense account are essential to building a strong foundation for financial independence.
A variable expense allowance in budget is important to save for those expenses that seem to “hit us unexpectedly”. Funny thing is, we know these expenses will occur. They are an inevitable fact of finances for most of us. So, why do we call them unexpected? I can’t explain why, but there are many of us who make this very BIG mistake in our budgeting.
Some expenses don’t occur monthly. Some are paid out every now and then, quarterly, yearly, or bi-monthly, or semi-annually. These are expenses like car insurance and maintenance, home insurance and maintenance, property taxes, income taxes, medical expenses (prescriptions, deductibles, co-pays), pet care, school expenses (supplies, trips, activity fees, books), and clothing. Some of these are huge expenses that can put a ripple in any good budget if not planned for.
Most of us have good intentions, but it’s easy to fall prey to credit card companies without a plan to cover all of these “unexpected” expenses. The term still makes me chuckle. I mean, don’t we “expect” to wear clothes? It’s even funnier to me knowing that I was guilty of this very thing. Poor Planning! Not expecting what should be expected.
Lesson ……….Don’t forget about this expenses in your budget. They will sabotage best of intentions!
The other essential ingredient to a successful budget is a savings plan. A good savings plan should have a goal to reach at least minimum amount necessary for you to survive for a three to four month period. It may take time, but this a strategy that provides a fail safe against a financial crisis. Crisis such as serious illness or job loss.
Trying to save money by cutting your savings budget out will eventually backfire on you. It is essential to build financial security, in order to remain debt free, you must not compromise your savings expense.
