Have you ever been working on the budget and you wonder if you are saving enough for retirement? Well, Dave Ramsey gives us a great formula for putting away for our retirement. Dave recommends contributing 15% of your household income into tax-advantaged retirement accounts to retire comfortably. Depending on your situation, 15% can be small or large. This concept can raise more questions and can sometimes seem overly complex. It doesn’t have to be. But if you find yourself asking more questions and feeling unsure about the best route to take for you and your family, consider reaching out for help. You can start with a Master Budget Coach to help you understand the impact to your current budget and future state budgets. Your Master Budget Coach will also want to send you to an Endorsed Local Provided (ELP) to answer more of your questions, especially related to the management of your 401K or other retirement accounts. Feel free to contact Pannell Advisory Group for more information in this area and also checkout the ELP from Dave Ramsey’s website. Remember, we are here to help you so you don’t have to go it alone!
Every year, around New Year’s Eve, my husband and I take time out of our schedules to sit down and discuss our accomplishments from the year. We are each other’s accountability partners and we measure how well we did at meeting our goals through the year. It is at this same time that we discuss our goals for the coming year. It is a great time for both of us. Maybe because it is so hard to squeeze more than an hour or so together throughout the weekly routine to just relax, talk, dream and share. We do this annual retreat from life over a period of a day or two and we are very diligent about appreciating this time and purpose. Somewhere during this time, we almost always are reviewing our budget. This is when we look hard at anticipated expenses or new income as a result of setting new goals. For example, one year, I wanted to speed up the completion of my master’s degree. That meant we needed more money set aside for education than in the years before. Then there was the year we found out that my husband was taking a new position which was going to almost double our income. We new we want to put that money into our retirement. There was just no question about it. The new year brings us opportunities to reflect and to look forward. Make sure you don’t forget to include this time to review and plan from a budget perspective!
Surprises can be fun and exciting unless you are talking about unwelcomed surprises especially in a budget. Susan Schmidt says, “I didn’t expect the TV to get broken this month. But because I had my emergency fund in place, I found my self enjoying the process of researching product features and finding the right sale for me! There was no panic and I actually found I could do without the TV while searched for just the right one.” Those unexpected budget surprises are Murphy’s way of trying to get in your head and push you to make unwise choices. Your emergency fund is what puts Murphy in his place. Take a look at last month’s budget or last year’s budget and find all of the unexpected surprises. Take an average of what you spent to cover those expenses. Check your budget for a line item for the unexpected surprises. You may need to adjust the amount based on your current condition. Consider things like, is the car in need of major repair in the near future, do the kids need new summer clothes, are the kitchen appliances going to be replaced soon. These are all things we don’t like to think about, but if we plan for them, then putting a little extra away each week will get us closer to locking up Murphy for good!
Dave Ramsey offers a Quick Start Budget form that simplifies the budgeting process. It is available for free at http://www.daveramsey.com/budgeting/how-to-budget/. It doesn’t matter whether you are new at creating and working with budgets or you have struggled with budgets over time. The important thing is that you do a budget and feel comfortable working with one. The process is really easy: Identify all income; Identify all expenses; Subtract expenses from income and adjust until the result is zero; Track expenses through the month. Through out the month, you may need to adjust the budget. A great exercise is to take the expenses and income from last month, last quarter or last year and see how you have been doing. Chances are you see very quickly some things you want to change immediately. Reviewing last year’s budget in January, puts you in a position to avoid the unexpected in the new year. The Quick Start Budget makes it one baby step closer to mastering the Budget process. Happy Budgeting!