By Michael Kastler | Budgeting Money Tips

Are you struggling with balancing your expenses to your income each month?  Do you get frustrated when no matter what budgeting worksheets tool that you use, the numbers just don’t work in your favor?  Or perhaps you simply can’t find the time to sit down once a month work out a reasonable budget, no matter what budgeting worksheets tool you have available.  The solution may be more than just getting the numbers to work out.  Some behavior change may be in order.

Studies show that an individual’s values and behavior have more to do with overspending than a lack of understanding the math behind it.  One such study is by the Credit Alliance Group, who has been helping consumers with debt for over 5 years.  They have found the status of the American economy seems to be based on consumer overspending out of a false sense of entitlement… I am American therefore I deserve six figures, a sports car and a dream home.  Another driving factor would be the resilient philosophy “things will work out,” without much planning or preparation.  (see full article)

With such behavior, the numbers will never work out in your favor.  With continued overspending based on emotional impulses and hence overspending, it doesn’t matter what budgeting worksheets you use, you’ll always be in the hole.  But don’t give up on budgeting just because of your attitude or behavior!   There are tools and services that can help teach you a new way of thinking to help you live within your means.  As a first step, look for budgeting worksheets that help you through the behavior aspects of budgeting, like goal setting, for example.

All budgeting worksheets on the market will show you your numbers:  income, expenses and maybe assets and debt, if you can find a robust one.  Not very many budgeting worksheets go beyond the basics to show your behavior month after month and whether you are meeting your financial goals or not.  But they do exist.  Find one and learn how to set your goals, manage your paycheck, set-up auto payments for your bills, and watch your behavior change for the good.  Here are a few specific tips.

Budgeting Worksheets, Behavior Tip #1:

Find and use goals-based budgeting worksheets

The most common programs individuals use for budgeting such as Quicken, Mint and others are not ‘forward-looking’ budgeting programs.  They merely track what has already been spent and use that as a model for subsequent months.  If you’re over spending, you will then keep over spending.  They don’t point out the mis-behavior and help you correct it.

There are a few budgeting programs that do help you set goals, manage your income, allocate your paycheck, pay-off debt and fund your goals.  If you can’t find such a budgeting worksheet system, check out our Budgeting Worksheets .  We give you all these features and more at a fraction of the cost of Quicken.

Behavior Tip #2:

Set your goals

Living on your lowest income possible may seem like you are depriving yourself of the finer things for your overall income bracket.  Not really!  You are merely delaying some of the luxuries that you would like to have.  Set these items as goals that you save for.  By living at your lowest income possible and saving your commissions or bonuses, you will quickly be able to meet your goals of acquiring the items you want or need – and pay for them in cash!  (see tip #3)

Categorize and set priorities for each of your goals.  Your “needs” list should come before your “wants” list.  As you acquire the items off the needs list, such as a reliable vehicle, then move on to your wants list.

Create the goals together with your significant other, write these goals down, and review together on a regular basis.  Writing your goals down is essential to making them happen!

Behavior Tip #3:

Make the decision to become debt-free and eliminate credit card spending

By living on your lowest income possible, you won’t want to be spending any of your available income on interest payments.  You’ll want to save as much as you can to achieve your goals.  Stay away from bank loans and credit cards.  Pay off all your existing debt.

Studies show that by paying with cash instead of loans or credit cards, you will not only avoid the interest payments, but you will spend less money.  It’s much harder to part with cash than it is to swipe or wave a credit card.  Once you get in the habit of saving for your goals and paying cash, instead of borrowing, you will find yourself moving on to wealth building before you know it.

Behavior Tip #4:

Review your budget every month

Once you’ve mastered how to set goals, pay off debt, save for and met your short-term goals, you now need to develop the discipline to follow through every month.  Don’t give in to the temptation to give up after just a couple of months.  Studies show that it takes several months to unlearn bad behavior.  Once you’ve been on a strict program for about 6 months and you start to see progress, you will not want to go back to the old way of doing things.
 

Behavior Tip #5:

Seek out a Financial Wellness professional

Even very prominent individuals with high incomes can have trouble staying on track month after month.  If you lack the time required, it can be difficult to break the paradigm all by yourself to change your lifestyle.  This is where a Budgeting Coach or Financial Wellness professional can help.  There are offerings in the marketplace that provide you various levels of service from setting up your budget for you to taking over all your day to day finances, kind of like your own personal CFO.

To understand the types of services and the benefits, check out Levanto Financial.  They specialize in Financial Wellness and can tailor a program to meet your needs.  Your long-term financial security is well worth the minimal cost of such a service.  Levanto is an independent financial wellness company.  They do not sell investment products or insurance, they only focus on you.

Your Next Step: Find the right budgeting worksheets for you

Any time of the year is a great time to take inventory of your current financial position.  Check out the Personal Finance books on the market.  If you want an inexpensive and cookbook-style approach, try our personal finance book and corresponding budgeting worksheets.  At our blog site, you’ll find a whole host of articles that will help you get started.   If you need one-on-one coaching, we can help you with that too.  It will be well worth the investment of your time.

Michael T Kastler is a Budgeting Coach, author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog that helps individuals become debt free meet financial goals can be found at http://www.budgetingmoneytips.com

Copyright 2011  Kastler Consulting Group, LLC  |  All rights reserved

Continue Reading

By Michael and Julie Kastler | Budgeting Money Tips

If you are recently married or a long-time married couple, you’ve probably experienced the significant role that managing money can have in a marriage.  One person is probably a spender and the other a saver, one is diligent on planning a budget and the other is not, one wants to remain debt free and the other is out buying the next biggest toy on credit.  Sound familiar?

Personal finance and money matters are one of the highest causes for divorce.  Diverging on your money plans can yield to a divergence in your relationship.

Here are a few money lessons to help you and your spouse get on the same page, develop joint goals and  a strategy to meet those goals:

Money Lessons for Married Couples, Tip #1:

Set Your Goals, Together

The biggest mistake that married couples can make is to having a different set of goals – his and hers.  Even if both are income earners, life goals and financial goals should be worked on together as one unit.  For example, if a goal is for her education, it should be a common goal for the both of you.  Likewise, a new big-boy toy for him should be a common goal for both of you.

By establishing goals together you are forcing yourselves to communicate and also take responsibility for each other’s goals.  After all isn’t that one of the reasons you got married in the first place, to reach goals together?

Make a list of your goals on a piece of paper or find a good budgeting worksheet system that is goals-based.  By writing down your goals you are setting yourself up for no surprises to each other and maximizing your chances of meeting those goals.

Common goals is the number one money lessons goal!

Money Lessons for Married Couples, Tip #2:

Prioritize, Needs vs. Wants

Now that you have a common list of goals, prioritize them.  Start with the items you absolutely need.  For example, if you have a baby on the way, there are certain things that you will need.  Lump those together as ‘baby items’ and make sure those are at the top of your list.  Another example might be a newer car if your current one is on its’ last leg.  These are legitimate needs.

An example of a want would be an iPad 2 – it’s a nice item to have, but it certainly is not a necessity.  Another example is going out to restaurants, a luxury that one can do without that many of us treat as a need. If you are short on cash, I would recommend making eating out a want and set it as a goal that you save for, instead of a need.

As companies diminish their retirement plans for employees, saving for retirement is another area that many people need to set as a need.  As a long-term goal with many years to save, the amount of money applied from your available monthly income could be very small (see my blog on compound interest and Tip #4 for more detail).

If you have non-mortgage debt, I would recommend adding “Pay-Off Debt” as a critical money lessons need…

Money Lessons for Married Couples, Tip #3:

Pay-Off Debt and Remain Debt-Free

If you have read any of my articles, blogs, or viewed my website, you know how I feel about getting your debt paid off!  Of the main money lessons Dave Ramsey so eloquently demonstrates, debt is a shackle around your entire body, literally stopping you from reaching your goals and living to your full potential.

By paying off your debt, you could potentially free-up hundreds of dollars per month that can now be applied to your above stated goals.  By being debt free, you’ll now be able to pay cash for those goals!  Imagine taking a nice vacation and coming home to no bills for the trip!  My new bride and I are writing this blog on our way home from our honeymoon and I can’t even describe the joy we have by paying the entire trip in cash!

If you’re a numbers person, then you’ll appreciate the long-term mathematics of debt avoidance.  Add up all the current interest payments you currently pay and multiply that out over your lifetime.  How big is that number?  How many of your goals could be realized if you avoid those debt payments?

Being debt free leads you to the next money lessons step…

Money Lessons for Married Couples, Tip #4:

Build wealth

Once you’ve mastered how to set goals, prioritize, and pay-off debt, you’ll be well on your strategic path to building wealth and realizing your long-term goals such as retirement or your children’s college education.

By living well below your income level and remaining debt free, you will have substantial money left over at the end of the month to sock away for the long term.  When you consider the time value of money and the greatest financial wonder:  compound interest, you can easily accumulate a significant nest egg.  Here are some examples:

• Saving $100 per month for 20 years at 8% interest will yield $58,902
• Increasing that saving to $200 per month for 20 years would yield $117,804
• Extending the time to 40 years, you would accumulate $698,201

No matter what your income level is the key money lessons are to find ways to live well below that income level and SAVE!

Money Lessons for Married Couples, Tip #5:

Find a Budgeting Worksheet that is Goals-Based

It’s really easy to get off track.  Life happens and we get busy with work, family, friends, and get taken into many other directions.  To make sure you don’t get off your financial track, write everything down:

• Your Goals
• Assets and Debt
• Income
• Monthly Budget
• Cash Flow Analysis
• Your Plan to Pay-Off Debt
• Your Plan to Fund your Goals

The simplest way to write these out is to find a goals-based budgeting worksheet that allows you to plan, record and track all the above.   You’ll find it convenient that the budgeting worksheet will do the math for you and once set-up, you’ll only need about 30-minutes per month to stay on track.

A really excellent budgeting worksheet should GUIDE you through the entire process.   Search for a high quality budgeting worksheet that is easy to use, inexpensive, and provides all the worksheets necessary to meet your family’s goals.

Money Lessons for Married Couples, Tip #6:

Communicate Regularly and Make it a Family Affair

Marriage is the ideal accountability partner.  You’re both working towards the same goals – and they’re written down!  All that you need to do now is have a periodic review and make sure you’re on track.  Review your goals about once per month and make any adjustments necessary as you meet goals and add new ones.

If you’re using budgeting worksheets, update them together every month, especially if there are any significant changes such as income.  By working together, reviewing your plans, and being accountable to each other, it won’t be long before you have a well-orchestrated financial and life plan to strive for.

Also, if you have children, this is a good opportunity to show them some financial responsibility.  Have regular discussions about your budget (you don’t have to give details) and how mom and dad are saving for their goals.  Consider putting your kids on a “Kid’s Reward Program” so that they can begin to save for their goals too!

Money Lessons: Your Next Step

Implement these Money Lessons!

Any time of the year is a great time to take inventory of your current financial position.  Check out the Personal Finance books on the market.  If you want an inexpensive and cookbook-style approach, try our personal finance book and corresponding budgeting worksheets.  At our blog site, you’ll find a whole host of articles that will help you get started.   If you need one-on-one coaching, we can help you with that too.  It will be well worth the investment of your time.

Michael T Kastler is a Budgeting Coach, author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog that helps individuals become debt free meet financial goals can be found at http://www.budgetingmoneytips.com

Copyright 2011  Kastler Consulting Group, LLC  |  All rights reserved

Continue Reading

By Michael Kastler | Budgeting Money Tips

If you are self-employed, on commission, or switch jobs every other week, you’ve experienced living on irregular income. Are your current budgeting worksheets not accommodating the way you earn money? The challenge is how to budget your money so that if you’re in a down cycle, you still have the money to pay the necessary expenses at the end of the month.

Poor budgeting worksheets for irregular income is one of the three most common objections I hear to creating a budget. The other two are “I don’t make enough money to budget” and “I make more than enough to pay my bills, so I don’t need to budget.” I’ll address these two excuses some other time.

Most irregular income earners will just wing it by using standard budgeting worksheets and use the near maximum monthly income, average of their expected monthly income, or not budget at all – thinking they’re invincible and a down cycle won’t hit them. Unfortunately, life usually catches up with us and if we don’t plan for down periods in income, it is likely to happen when we least expect it, and can least afford it.

Please don’t be tempted to skimp on budgeting just because your income is unpredictable or you can’t find a budgeting worksheet to suit your needs. Murphy’s Law has a way of seeking and finding you out.

I’ve been fortunate (or unfortunate) to experience irregular income just about my entire working career. There is nothing different about budgeting for irregular income than budgeting for irregular expenses. We all have irregular expenses: utility bills, car insurance, vacations, education expenses, etc. So irregular income is handled in a similar way to variable expenses. Here are a few tips to help alleviate the mystery:

Budgeting Worksheets, Irregular Income Tip #1:

Plan on your lowest or worst-case income possible

The biggest mistake that irregular income earners can make is taking on a mortgage or rent, vehicle, and other expenses based on an average or higher than average income every month. If you have several low income months in a row, guess what happens.

As difficult as it may be, plan for the worst-case monthly scenario. If that means budgeting for $1,500 per month in income and renting an apartment for a short time, then that’s what you need to do. Any upside income (and hopefully there’s a lot of that!) can be put into your emergency savings first and then toward your goals, such as upgrading to a larger home,.

Sacrifices may be needed to live on the lower monthly amount for a period of time, but you will be much better off in the long term.

Budgeting Worksheets, Irregular Income Tip #2:

Set your goals

Living on your lowest income possible may seem like you are depriving yourself of the finer things for your overall income bracket. Not really! You are merely delaying some of the luxuries that you would like to have. Set these items as goals that you save for. By living at your lowest income possible and saving your commissions or bonuses, you will quickly be able to meet your goals of acquiring the items you want or need – and pay for them in cash! (see tip #3)

Categorize and set priorities for each of your goals. Your “needs” list should come before your “wants” list. As you acquire the items off the needs list, such as a reliable vehicle, then move on to your wants list.

Create the goals together with your significant other, write these goals down, and review together on a regular basis. Writing your goals down is essential to making them happen!

Budgeting Worksheets, Irregular Income Tip #3:

Remain debt free

By living on your lowest income possible, you won’t want to be spending any of your available income on interest payments. You’ll want to save as much as you can to achieve your goals. Staying away from bank loans and credit cards is a good idea even if you are not on irregular income!

Studies show that by paying with cash instead of loans or credit cards, you will not only avoid the interest payments, but you will spend less money. It’s much harder to part with cash than it is to swipe or wave a credit card. Once you get in the habit of saving for your goals and paying cash, instead of borrowing, you will find yourself moving on to wealth building before you know it.

Budgeting Worksheets, Irregular Income Tip #4:

Build wealth

Once you’ve mastered how to budget your irregular income, saved for and met your short-term goals, you can now go into major wealth building mode. Don’t give in to the temptation of increasing your monthly expenses and living beyond your lowest income possible scenario. By spending at the low income level and having your short term goals met, you can now move on in financial freedom to your long term goals, save for a very nice retirement, or give away generously to your favorite ministries or charities.

To keep yourself incented, learn and exercise the greatest financial wonder: Compound Interest. By saving regularly, even small amounts, and leveraging TIME, you can easily accumulate a significant nest egg for your long-term goals or retirement. Here are some examples:

• Saving $100 per month for 20 years at 8% interest will yield $58,902
• Increasing that saving to $200 per month for 20 years would yield $117,804
• Extending the time to 40 years, you would accumulate $698,201

Budgeting Worksheets, Irregular Income Tip #5:

Find Budgeting Worksheets that allow for irregular income

The simplest way to account for irregular income is to find a budgeting worksheet that allows you to change your monthly or even your weekly income. Most budgeting worksheets only allow you to enter a set weekly income and then budget to that income each week of the month.

A really excellent budgeting worksheet should GUIDE you through the irregular income and irregular expense process. Search for a high quality budgeting worksheet that is easy to use, inexpensive, and provides all the worksheets necessary to meet your family’s goals.

Your Next Step

Get our budgeting worksheets and enter the iPad 2 Giveaway!

Any time of the year is a great time to take inventory of your current financial position. Check out the Personal Finance books on the market. If you want an inexpensive and cookbook-style approach, try our personal finance book and corresponding budgeting worksheets. Order the new Version 2 budgeting worksheets and you’ll receive the workbook for free and be entered into our iPad 2 Giveaway sweepstakes!

Michael T Kastler is a Budgeting Coach, author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog that helps individuals become debt free meet financial goals can be found at http://www.budgetingmoneytips.com

Copyright 2011 Kastler Consulting Group, LLC | All rights reserved

Continue Reading

The convenience of credit and debit cards can lure you into spending frenzy that can spiral out of control before you know it.  Have you ever come to the end of the month and asked, “Where did all the money go?”  The convenience of plastic has made it far too easy to make purchases that we might not make if we had to dip into our wallet and make a cash purchase.

Studies have shown that spending increases as the means to pay for an item becomes easier.  In other words credit cards have made buying transactions easier, so we’re more likely to buy stuff without concern, until the bill comes at the end of the month!  Likewise, new ‘pay with a wave’ credit cards will make it easier still and foster even more poor spending habits.

I’m a big believer in the notion that cash is king when it comes to paying for items.  If you don’t have the cash, you can’t afford the item and shouldn’t buy it.  Traditional means of budgeting to help curb spending is the Cash Envelope system.  But there are clearly some disadvantages of that.  There’s also a 21^st century version of the Cash Envelope system called Virtual Envelopes.  We’ll explore how you can implement a Virtual Envelope system using your budgeting worksheets.

Traditional Approach: Cash Envelopes for all your Spend Categories

One past useful money budgeting technique was to set up your saving and bill paying system using cash envelopes.  Basically the cash envelope system consists of keeping separate envelopes for your spending categories and populating them with cash from your income source.  Then when a bill comes due or you need to go shopping for food or an item you need, you simply pay for it with cash from the appropriate envelope.

The big advantage of cash envelopes is that, if you budget properly, you will always have the cash to pay a bill when it comes due.  No more worrying about where the money will come from, be it for mortgage or rent, utilities, car payments, repairs, taxes, discretionary spending, etc.

However, there are many disadvantages of this old technique in keeping all that cash around. It’s cumbersome and simply not safe as you can easily accumulate hundreds or thousands of dollars in your cash envelopes.  Just imagine the heartbreak and financial setback should something happen to all that cash.

Alternative Approach: Use Virtual Envelopes for most of your Spend Categories

In today’s electronic world, there’s a version of the envelope system that can take the old proven approach and revamp it for the 21st century:  Virtual Envelopes. Built on the solid foundation of the Cash Envelope system, Virtual Envelopes works seamlessly with your existing cash envelopes and your budgeting worksheets.  The only difference from Cash Envelopes is that for some budget categories you will now deposit the cash into your bank or credit union and manage those categories online, or “virtually.”  Hence, the term Virtual Envelopes.

When you deposit money from your income source, you simply allocate the appropriate dollar amounts to the budget category accounts, based on your spending plan or budgeting worksheet.  It’s easy to move money around your various spending categories or budget category accounts whenever you need to.  When a bill comes due, you simply transfer money from the budget category account to your checking and then electronically pay the bill.  It’s easy and extremely fast once you set it up through your banking institution.

Virtual Envelopes Advantage #1: It’s Easy to Get Started

To get started, ask your bank if they can set up your Virtual Envelope budget categories as sub-accounts underneath your savings account.  There should be no charge for doing this.  If your bank will not provide this service for free, check around for other financial institutions in your area, including your local credit union.  I’ve done virtual enveloping for about 30 years through a couple different credit unions.  I’ve also had a couple colleagues using this approach.  So don’t take “sorry, we can’t do that” as an answer from your existing financial institution.

Additionally, set up your savings, checking and the sub-savings accounts to have internet-access via your home computer, free of charge.   This will allow you the convenience of budgeting and bill paying from the comfort of your home.  If you are uncomfortable using internet-access for banking purposes, there are just a couple things to be aware of and you will be fine.  First, only use a reputable bank or credit union.  They have the best security in place for all of your data access requirements.  Follow their password guidelines and change your password regularly.  In my book, I dedicate an entire chapter to Virtual Envelopes and how to set up your sub-accounts.

Virtual Envelopes Advantage #2: Works Hand-in-Hand with your Cash Envelopes and Budgeting Worksheets

Has the cash envelope system gone the way of the dinosaur?  No!  I still recommend it for all of their budgeting categories for children and for the cash spending categories for adults, such as food and walking around money.

Virtual Envelopes can co-exist with Cash Envelopes just fine.  Use the Virtual Envelopes for those monthly expenses that you would normally write a check or electronic payment.  Examples would be mortgage/rent, taxes, car repairs, utilities, savings, debt pay-down, etc.

Our budgeting worksheets incorporate the strategy of using Virtual Envelopes and help you set up your accounts accordingly.  We define auto-pay, e-check, and other banking terms that will guide you to set up your Virtual Envelopes effectively in managing your monthly budget.

Virtual Envelopes Advantage #3: Safety, Convenience and Flexibility

The biggest advantage of Virtual Envelopes is that your money is safe in a banking institution instead of cash in envelopes in your house.  Just imagine if you had a robbery, fire, or just plain old forgot where you put that cash envelope with your rent payment.  Not a fun time trying to recover that!

With Virtual Envelopes your money is not only safe but you can access your accounts any time from the convenience of your computer at home.  You will be able to see the account and sub-account balances for each of the budget categories.  You will also be able to move money from one budget category to another when necessary and also move money into your checking account when it’s time to pay bills.

What could be better?  Virtual Envelopes are based on the proven fundamental budgeting technique of Cash Envelopes, but thanks to modern technology can now provide the ultimate safe, convenient, and flexible solution for your monthly money management.

Get Started with Virtual Envelopes Now

Any time of the year is a great time to take inventory of your current financial position.  Check out Virtual Envelope resources including our Personal Finance Book and corresponding Budgeting Worksheets and put Virtual Envelopes to work for you.  At our blog, budgetingmoneytips.com, you’ll find a whole host of articles that will help you get started.   If you need one-on-one coaching, we can help you with that too with our Budgeting Coaching Program.  It will be well worth the investment of your time.

Michael T Kastler is a Budgeting Coach, author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog that helps individuals become debt free meet financial goals can be found at http://www.budgetingmoneytips.com

Copyright 2011  Kastler Consulting Group, LLC  |  All rights reserved

Continue Reading

There’s been so much pressure the last few years to reign in our spending, develop frugal budgets, and redefine our expectations for our financial future. In the midst of downsizing, scaling back and reworking our budgets, it’s easy to overlook a few key things that require…well, a bit of spending.

Too often when trying to save money we’ll cut very important items such as life insurance, health insurance, charitable giving and even our long term savings goals. Don’t let yourself fall into the trap of cutting these very important budget categories.

Using quality Budgeting worksheets will allow you to track these expenses as well as the standard monthly expense categories. A robust monthly budgeting worksheets plan for your family should include these often overlooked areas of your life:

• Charitable Contributions
• Your Life Goals
• Emergency Fund
• Health Insurance
• Life Insurance

Overlooked Budgeting Worksheets Categories:

#1 Charitable Contributions

This one surprises many people because it doesn’t appear on their list as “necessary.” In reality, it’s one of the most important categories we have. Giving provides a healthy spirit, helps the community, and sets a great example for our children. Can’t do the standard 10% of your gross income? Consider starting with a smaller percentage and work your way up a couple of percentage points each year. Also consider giving automatically right from your paycheck to stay on track and make it a regular habit.

#2: Your Life Goals

Want to retire early? Take a vacation to Hawaii? Whatever your life goals are, they won’t happen unless you plan for them. Many times we are enticed to take that vacation “special” that pops up on an internet ad because it’s too good of a deal to pass up. But will you have to go into debt to realize that goal? How happy will you be when you get home facing the stack of bills?

Will you be able to retire or will you have to keep working to maintain your standard of living? If your employer doesn’t offer a retirement plan (and most don’t), it’s up to you to take care of yourself. Educate yourself on the many fine mutual funds, index funds or ETF’s that are available. Any of those can be started as an Investment Retirement Account (IRA) with as little as $500 up front and $25-50 per month. If you don’t have one, do your research NOW and get it in place this month!

Having your life goals documented in your budgeting worksheets will make ensure that you meet those goals!

#3: Emergency Fund

Many people think that an emergency fund is a bunch of money in their checking account. No! A bona-fide emergency fund is 6-12 months of living expenses kept in a separate liquid account such as a Money Market fund. If you don’t have an emergency fund currently, you can start one easily and contribute to it a little bit at a time until you obtain 6-12 months of living expenses in that account. If you get ill or lose a job, you’ll need this. Don’t use this money for anything else!

Keep your budgeting worksheets up to date with your latest Emergency Fund status.

#4: Health Insurance

Considering that a major illness could put you in a bankruptcy situation, it’s critical to make sure you are covered in some type of health care plan. If your employer doesn’t offer a health plan, consider many of the low cost high-deductible plans that are on the market. Such plans will limit your out-of-pocket liability and protect you when you need it most – if a catastrophic illness should occur.

Also consider a long term disability insurance. It may cover a significant amount of your expenses should you have a long-term illness and can’t work for an extended period of time.

Make sure your budgeting worksheets have a line item for all your health insurance needs!

#5: Life Insurance

I’ve seen too many life-ending tragedies followed by a financial tragedy for the loved one left behind without the means to pay the bills. Don’t let this very unfortunate double tragedy happen. There are many inexpensive life insurance policies on the market. You don’t need a policy that will make someone rich, you just need to provide for a few years for them to get on their feet.

A good life insurance policy can also be part of your investment portfolio, offering a life savings plan for part of your retirement. That may be a good option for you if you feel like you are just wasting money on term insurance. A good insurance person can teach you the benefits of the various plan types.

Include life insurance in your budgeting worksheets documentation!

Budgeting Worksheets 101: Your Next Step

Get our budgeting worksheets and enter the iPad 2 Giveaway!

Any time of the year is a great time to take inventory of your current financial position. Check out the Personal Finance books on the market. If you want an inexpensive and cookbook-style approach, try our personal finance book and corresponding budgeting worksheets. Order the new Version 2 budgeting worksheets and you’ll receive the workbook for free and be entered into our iPad 2 Giveaway sweepstakes!

Michael T Kastler is a Budgeting Coach and author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog helps individuals become debt free and can be found at Budgeting Money Tips.

Continue Reading

Trying to find the perfect budgeting worksheets can be like trying to find the right used car:  there’s a million available but finding the right one can frustrating.  Searching the internet will provide an unlimited supply of budgeting worksheet available with various levels of quality and price.  As you go through all the options available, keep these tips in mind to find the one that’s right for you.

Budgeting Worksheets Tip #1:

Find Budgeting Worksheets with all the Categories You Need

Nothing can be more frustrating when you’re working on your monthly budget than to run out of budget categories as you’re grinding through numbers.  Trying to decide where to put an expense can be very frustrating.  When choosing your budgeting worksheets, look for some major main categories of expenses with the flexibility to add more detailed line items underneath.  For example, major budgeting categories include:

• Charities / Tithing
• Savings
• Housing
• Utilities
• Food
• Transportation
• Clothing
• Medical / Health
• Personal
• Recreation
• Debts

Virtually any expense you have can be put into one of these categories.  So your budgeting worksheets should have plenty of space or data entry “cells” within these major categories.

Budgeting Worksheets Tip #2:

Compare your Monthly Spend to a Standard Guideline

Once you put your numbers in, how do you compare to the national average or some other standard guideline?  The budgeting worksheet should give you some idea of how you compare in each of the above categories.   Then you can make some decisions if you’re over or under spending in some areas.  The beauty of using budgeting worksheets is not only to see where your money is going but to see how you compare to a standard guideline.

Budgeting Worksheets Tip #3:

Your Personal Cash Flow Analysis

Fully functional budgeting worksheets should calculate your monthly cash flow analysis so that you can determine if you are overspending based on your income on a monthly basis.  In order to determine your cash flow for the month, you will need to provide your monthly income information.   Good budgeting worksheets should do all the math for you, generate a meaningful chart or two so that you can quickly see the areas in your budget that need to be improved upon.  If you are over spending, you will need to adjust.  If you are under spending, start saving towards your goals!

Budgeting Worksheets Tip #4:

How to Handle Irregular Income or Expenses

One of the most difficult parts of budgeting that people tell me they struggle with is how to budget for those irregular expenses such as real estate taxes or car insurance that come due twice a year.  Another difficulty is for irregular income if someone is on commission or business-related income.

Most of the budgeting worksheets do not handle these irregular income or expense situations very well, making the budget inaccurate and unreliable or rely on considerable self-adjustments by the user.

A really good budgeting worksheet should have the ability to handle irregular incomes and expenses with ease.   Our budgeting worksheet has a Paycheck Allocator that makes this process easy-to-do and painless.

Budgeting Worksheets Tip #5:

Goals-Based

Most budgeting programs don’t accommodate for your financial goals, they simply look back at the previous month to help you determine your spend for the current month.  That is not good budgeting.  If you have a cash flow problem, then it will just perpetuate into future months and you won’t even realize it’s happening.  Furthermore, you are not creating a plan to achieve your goals.

Excellent budgeting worksheets will accommodate for your financial goals and help you determine what you can afford or what it will take to meet those goals.   It will take into account your income, current debt, expenses and savings to help you generate a plan to meet your goals.

Budgeting Worksheets Tip #6:

Pay-off Debt

Not surprisingly, most people that want to budget would like to pay-off their debt.  Try to find a budgeting worksheet that actually helps you do that!   A really good budgeting worksheet should have some capability to organize those debts and give you some options on how to pay them off as quickly as possible.

The budgeting worksheets themselves can’t pay-off the debt, you still need to do that part!  But the worksheet should allow you to shift money around on paper (computer screen) so that you can see the financial impact on your budget.  Giving up a small amount of spending in your discretionary categories and applying some of that money to your debt load will dramatically improve your financial situation.  Before you know it, you’ll be able to apply that extra money to your new goals – without going into debt!

Budgeting Worksheet Tip #7:

Ease of Use and Professional

The biggest complaint about budgeting is that it’s too hard and takes too much time.  Look for something that not only does all of the above functions, but is also easy to use from the get-go.   The forms should be intuitive, easy to identify the cells to fill in data, and easy to read print out report.

Excellent Budgeting Worksheets

Finally, my gauge of a truly excellent budgeting worksheet is to ask yourself, “Is this a report that I’d be comfortable taking to a financial planner, banker, or other professional for further advice or coaching?”   If the answer is yes, then you’ve done a good job!

Michael T Kastler is a Budgeting Coach and author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog helps individuals become debt free and can be found at Budgeting Money Tips.

Copyright 2011  Kastler Consulting Group, LLC  |  All rights reserved

Continue Reading