Budgeting: Its Importance & The Best Way To Make An Easy One
Finding Out the Truth About Budgeting
When most people hear the word budgeting they create an image of distress. They picture their happiness being stripped away from them alongside their freedom. A fun-free zone ruled by an iron-fisted tyrant for no clear purpose and no end in sight.
While for some this may be the case, most will quickly realize that this couldn’t be furthest from the truth.
What if I told you that a budget would mean you getting to do all of the fun, exciting, carefree things you wanted to do? What if I told you that budgeting would allow you to buy all of the things you truly want to buy, without having to feel guilty about it?
I think it’s time we find out what budgeting truly is.
– Table of Contents –
- So, What is Budgeting Then?
- The 5 Easy Steps to Budgeting
- Equip Your Budgeting With a GPS
- Budgeting FAQs
So, What is Budgeting Then?
Without a budget, rebuilding your credit can be extremely difficult. Getting that nicer, newer vehicle with a low down payment becomes nearly impossible. That house you’ve always dreamed of keeps on being just a dream. Those vacations you know you deserve…
Budgeting is a means to set your life in the direction you want it to head. It is the foundation for everything else that you will encounter through your journey into the future.
A good financial plan allows you to give up all the things you never realized were meaningless in your life while providing you a way to enjoy all the things you love even more.
Think that sounds too good to be true?
How Budgeting Works
Imagine you are in a car race. The timer is counting down. 3, 2, 1. It goes off and you shove the car into gear and slam down the pedal.
You take off and are quickly picking up speed, shifting into the next gear, and the next. You look over at the car you’re racing and laugh as they are falling behind. Now they are in your rearview and you feel untouchable.
Suddenly, the other car makes a sharp right.
You look at the road ahead and realize that you have absolutely no idea how to get to the finish line.
Most people drive aimlessly through the streets, making random turns or gassing it through intersections. Some people end up in the right place out of sheer luck, but most keep on like this until their vehicle runs out of gas and the race becomes even harder.
Making those turns might be fun in the moment, and speeding through the intersections may cause you to feel a rush, but it’s temporary. When it’s over you realize that you are still in the same race, with no end in sight.
But what if you had a GPS to show you the way? To guide you through every turn, every ramp, every exit. Even provide you access to shortcuts that would help you win!
That is what having a budget provides you.
The car is simply your ability to accomplish something, while the finish line is all of the goals and dreams you have for your future. Your GPS is the budget that gives you the direction needed in order to ensure you arrive at the finish line…all of the finish lines you ever set for yourself.
How Would Budgeting Help if I Don’t Know My Goals Yet?
You might be wondering, “What if I don’t have any goals set for myself?”
The truth is, it doesn’t matter. Whether you have clear goals set or not, your drive becomes easier when you have a GPS to show you the way.
We always have goals, but sometimes we just get sucked in by the noise that surrounds us and we lose sight of them. Budgeting can help us keep sight of them.
It doesn’t matter how big or small they are. You can drive a couple of blocks or make a cross-country trip. You can save up for your next vacation at an amusement park or travel around the world for half the year. Either way, a budget can help.
You can still take sharp turns and floor it through intersections every once in a while, but they are guided now. You have taken control, and now that you know the way, you can decide which turns in your path you would like to swerve over.
Now that we know what vehicle financial planning is, how do we get it started?
The 5 Easy Steps To Budgeting
Step 1: Understand How Much Money Comes In
You may think that you already know how much money you make but make sure you take a second look, just in case. You would be surprised how many of our customers here at Westland Auto Sales have absolutely no idea what their take home pay is.
A quick look at your paystub can clear up all of that. Just find the section that says net pay and note down how much it says. If you get paid twice a month, simply multiply that number by 2 (as long as it is the same hours you work) and you have your monthly income. If you are paid every other week (ie. every other friday, or saturday) then multiply the number by 2.15. Weekly payments would be multiplied by 4.3.
From here, note down any additional income you may have. If you walk dogs on the weekend or rent out a room, if you receive SSI or have other forms of fixed income, write them down.
This information provides you the starting point to building a healthy budget.
Step 2: Track ALL Previous Spending
This is the most crucial step of the process.
Without knowing where your money was being spent, you can’t predict where it will be spent and, best of all, where it needs to stop being spent.
Facing the Harsh Realities With Budgeting
This step can be hard for many people because it forces them to dive deep into their spending and become aware of the bad habits that we have that we tend to pay no attention to.
Those $10-20 meals at fast food joints, every day, sometimes for multiple meals a day. The grande caramel macchiato with almond milk and extra caramel and whipped cream. The clothes that were purchased that have never been worn a single time. The monthly memberships to delivery services, streaming programs, or gyms that have not been used in months. The few hundred dollars in drinks from tossing back a few with the buddies after work or hitting up the club every friday and saturday.
I bring these examples up because I’m guilty of a few of these myself and it was a little hard to see my hard earned money blown on things that I could barely even remember. As hard as it may have been though, it was eye opening and it will be for you as well.
Fixed & Irregular Expenses in Budgeting
These types of expenses are called irregular expenses, because they do not need to be there every month. If you were to skip a fast food meal or not buy that blouse at the store, no consequence would come of it.
Fixed expenses like rent, utilities, taxes, SUV/Truck/Sedan payment, insurance, and loan payments are the opposite. These are called fixed because there is no way around them. They will be there, consistently, month after month.
Make sure to note down both.
If you have a bank account or credit cards, apps like Mint, Personal Capital, YNAB, make this easy. You can link them up with your accounts and easily find your expenses neatly categorized by type.
Without accounts, you can still manage this by gathering up receipts of any and all cash expenses. You can manually categorize them as well so that a future step becomes easier.
Step 3: Every Dollar Has A Name in Budgeting
Like every turn your car makes should have a purpose, so should every dollar you spend. You can no longer go through the month hoping that you reach the end with enough money to buy food or pay some bills.
As a Buy Here Pay Here car dealer, we see firsthand what a lack of proper budgeting can do to people. Our account representatives work hard with our In House financing customers to ensure they keep their finances on track and their credit scores improving but when unexpected expenses hit, it can be devastating for everyone.
From here on, nothing will be unexpected.
Include Fixed Expenses in Your Budget
Knowing your fixed expenses can ensure that they will be paid consistently and on time. No eviction, repossession, or lights getting shut off will ever hit you by surprise.
These are priority expenses that need to be paid before any other spending occurs. However, we will need to add a few items to the list of these fixed expenses.
Health expenses, vehicle maintenance, “goals”, gifts, and finally, emergencies. I place quotations around goals because your goals will be different than everyone else’s. A trip to cancun for you could be a down payment on a SUV, Truck, Sedan for someone else. What’s most important is emergencies.
If you have no car financial plan whatsoever, then anything can become an emergency, even if you have a goal. Back to school and the kids need clothes and supplies? Emergency, there goes the trip you were saving for. Christmas time comes around and you have to get gifts for everyone? Emergency, trip is gone again. Vehicle had a flat tire? Emergency, no more trip.
With a budget, you can plan for all of the things that could go wrong, because they will. You have no control over when they will happen, but you do have control over how you will be prepared for them when they do and how they will be handled.
By having a budget, you can ensure you are never disrupted from your end goal.
Your irregular expenses come next.
Include Irregular Expenses in Your Budget
Now that you know where your habits lay, you can prepare for them a little better, the same as you do for the unexpected. Assigning a limit to yourself is healthy, and will allow you to enjoy the things you love all the more.
Budgeting isn’t about cutting out everything, it’s about choosing those things that are important to you and doing away with those that aren’t.
If getting a caramel macchiato every day makes you happy, then get it! Just make sure that it is accounted for in your monthly expenses. Really think about the things you purchase and how you feel about them. Stop blowing your hard-earned money on things that add no value to your life and save toward the things that do, even if you don’t yet know what they are.
Quick Note: Depending on what your goals are, keep in mind that some of the biggest changes you can make come from your transportation and housing expenses. Just because they are considered to be fixed doesn’t mean you can’t downsize to reduce them.
Step 4: Make Yourself Accountable
In the 1960s, a woman named Jean invited a group of friends interested in losing weight to meet together and discuss the best ways to lose weight. They came up with a plan and met every week to review their progress.
The results were outstanding.
The number of members grew quickly and these meetings were kept as a crucial part of their weight loss journey. A few years later and hundreds of thousands of pounds lost, Jean sold Weight Watchers and made millions.
Why is this relevant? Because the most important part of the Weight Watchers program is not their diets or meals, it’s their meetings.
These meetings hold their fellow peers accountable for their journey through losing weight, week after week. Without these meetings, everything would fall apart and they would revert back to their old ways.
It’s easy to tell ourselves, I’ll just have one more. It’s not like it’ll hurt anyone.
It does, it will, and it’ll keep getting worse until your carefully planned budget is no more.
Ask For Accountability Partners With Your Budget
Make sure that you keep your pocket tight and do your best to not go over, however, understand that there will be times that you will and it’s ok. When you do, tighten down a little bit in all areas so that the burden doesn’t seem overwhelming.
I would suggest asking someone to review your expenses with you at the end of the month and see how you performed side by side with your financial blueprint. Knowing that you will be talking to someone about your performance will make you more motivated to stick to it because you wouldn’t just be letting yourself down anymore.
Step 5: Make Budgeting A Habit.
The best way to form a habit is repetition. Once checking your budget becomes second nature, things become ridiculously easy.
At first, you will struggle. You will have moments when you will give in to your temptations to purchase things you had not planned for. Don’t beat yourself up.
Instead, start off by doing weekly check-ins. You can ask someone to review your spending with you as I’ve suggested, or you can try it on your own. Mark the event down on a calendar and quickly review your spending for the week.
Is it in line to meet the goal for the rest of the month?
If it is, great! Keep it up and make sure to reward yourself with something small for having the check in. If it isn’t, then great! Tighten the spending in areas that you can and make sure to reward yourself for noticing.
Once you are used to reviewing your week, try extending them to every other week and then every month. Make sure to always mark it down and reward yourself on the days you review.
Equip Your Budgeting With a GPS
You deserve all of the things you dream of, even the ones you haven’t dreamed of yet. A budget will allow you to prepare for both the expected and unexpected. The more prepared you become, the more opportunity will come your way.
It’s just how things work.
Remember to start off by understanding your income so it can allow you to really narrow down on how much you can afford to be spending. Check your previous months of expenses so you can gain a picture of where you should be plugging the leak and then assign each $Washington$ a task.
Keeping a financial blueprint long-term will allow you to improve your credit and maintain it great but it can only be kept if you make sure to never allow yourself outs. Having a friend or family member to help keep you accountable will ensure that your vehicle never gets off course.
You deserve a great vehicle, a beautiful home, and regular vacations. You deserve to be easily approved for anything you could need without having to chop off your arm and leg as a down payment.
Most of all, though, you deserve to never have to deal with emergencies that set you back to zero.
A budget can make your life fun and full of opportunities that you never saw before. It will show you the easiest way to the finish line of your choosing.
So what will you choose?
Westland Auto Sales Fresno’s Buy Here Pay Here Car Dealer is helping 1000’s of people around Fresno make better financial decisions and get in a vehicle they love.
Budgeting is not easy without a little guidance. As part of that guidance, here are some frequent questions we hear revolving budgeting.
Q. What is the simplest budgeting method ever?
The simplest budgeting method will come down to what your personal lifestyle and personality vibes with. We, however, recommend you start off with the 50-30-20 rule. It is a good starting point that can be adjusted as needed.
Q. What is the 50 30 20 rule?
The 50 30 20 rule is a budgeting guideline where 50% of your income is allocated for needs (essential expenses), 30% for wants (non-essential expenses), and 20% for savings or debt repayment.
Q. How should you budget for a car?
When budgeting for a car, consider the total cost of ownership, including purchase price, insurance, maintenance, fuel, and registration fees. Allocate a portion of your monthly income to cover these expenses. If you have bad credit, you will likely need in house financing or a buy here pay here car dealer. If you are close to our area, we recommend you pay us a visit. Outside of our area, we suggest you read our guide on finding amazing dealerships close to you.
Q. How can I start budgeting effectively?
To start budgeting effectively, track your income and expenses, categorize your spending, set financial goals, prioritize essential expenses, reduce discretionary spending, and save a portion of your income regularly. This may sound daunting at first, but take it one step at a time. This is a lifestyle change that doesn’t need to be rushed.
Q. What are the benefits of budgeting?
Budgeting offers several benefits, including better financial control, increased savings, reduced debt, improved decision-making, reduced financial stress, and the ability to achieve long-term financial goals. Everyone who budgets properly ceases to live paycheck to paycheck. Everyone who budgets like a pro lives the life they want and is able to achieve true financial freedom.
61.3% of the American population lives paycheck to paycheck because of a lack of proper budgeting. That includes high-earning individuals. Less than 5% is truly financially free.
Do you want to be like the majority of Americans, full of stress and worry, unable to live how they want because they are bound by their finances? Or do you want to take back control and be like the top 5%, able to be free of financial burdens?
I know what I want.
– Shameless Plug –
Contact Us Today to Get Approved For Your Pre Owned Vehicle
Our team will help you get the pre-owned vehicle you need. With timely payments, it can improve your credit as well.
Thousands of other happy customers of the Fresno area just like you have already been approved and are on their path to a better future. With low down payments starting at only $500, great premiums for your trade-in, and a free warranty, you’ll be set up to succeed from the start.
Contact us today! Learn all about our selection of pre-owned vehicles and bad credit car financing options.
Extra Resources To Help On Your Journey
We love to share the wealth! Here are some resources and trusted vendors that we personally use. They can help you take care of your vehicle as well as keep your credit and finances in tip-top shape:
High Quality and Affordable Car Parts: Advance Auto Parts
Car Audio & Sound Systems: Eonon
Premium Wiper Blades & Accessories: Clix Auto
Easy Key Replacement & Programming DIY: Car Keys Express
High-Quality Orignal and Custom Car Lighting: LASFIT
Quality Car Parts/Accessories (mats, covers, assemblies): Oedro
Premium Car Detailing Supplies: Chemical Guys
High-Performance Car Parts & Air Filters: KN Filters
High-Performance Parts: Max Speeding Rods
Speed and Performance Parts: Spectre Performance
Air Intakes: Airaid
Original & Aftermarket Wheels: OE Wheels LLC
Battery Tenders: Deltran Battery
DIY Car Extras
In the event your dealer doesn’t provide you a history report: VinAudit
To learn to recondition your old car battery: EZ Battery Reconditioning
For DIY Ford vehicle repair: Ford Shop
To learn to take some knicks out of your car’s paint: High Quality Car Spray
Personal Finance & Credit
For a DIY credit repair course: DIY Credit Repair
To help you get free of debt and increase your credit: What Lies In Your Debt?
For a high cash-back credit card (make sure you only use it as if it’s a debit card!): Laurelroad
We will keep sharing all our vendors that we have a great experience with. Only the ones we see align with our values as time goes on, both locally and nationwide.
Disclaimer: The information provided in this article is for educational purposes only. It is not financial advice. Always consult with a qualified financial professional for personalized guidance.