SMS 173 – Budgeting Q&A

Budgeting Q&A

  • Is there one best way for everyone?
  • How has budgeting changed and evolved for you as you’ve progressed through your life stages?
  • When did you first start using a budgeting tool and was it out of necessity or desire or because you “thought you should”?
  • Can you speak to bringing a partner in on your budgeting process? 
  • How budgeting practically look like for you and your wife? What roles do you both play in the process?
  • Did you get your children involved in the budgeting process as a family and as their own individuals with their personal budgets?
  • Has your background as a CPA or working within corporate finance benefited you in terms of budgeting at the personal finance level?

Methods of Budgeting

1. 50/30/20 Budget 

Break down your expenses into three categories: needs, wants, and savings – 50 percent of your take-home pay should go towards needs, 30 percent should be devoted to wants, and 20 percent should get put into savings) –  the balance.com | Paula Pant

2. Predictable vs. Unpredictable –  Shannon Lee Simmons

3. Mandatory vs. Discretionary – the method Trevor uses 

Tools

App vs. Spreadsheet

Setting up Your Budgeting Tool – what does it actually look like?

  • Expense tracking vs. Budgeting
  • Describe the layers and categorization rationale 
  • How do you build in or account for savings?
  • How to maintain the diligence or self-discipline to maintain your budget (i.e. day-to-day expense tracking) and what does your process look like?

**Moving from expense tracking to budgeting

  • When to move from expense tracking to budgeting
  • How to actually set realistic budgeting figures
  • How to stick with your budgeting figures or when to make adjustments 
  • How do you go about setting that goal for savings and how do you stay motivated to keep that momentum going?
  • How to use your budget as a tool (i.e. ramp up your savings or repay debt versus simply using it to maintain a balanced budget where you ensure you are spending less then you earn)

Do’s and Don’ts

  • Do: Updating your budget close to when you spend the money for a cause and effect
  • Do: Collaborate – it has to be a partnership in any relationship, not one person’s responsibility 
  • Do: realize that budget planning is not math its actions
  • Don’t: Get too granular
  • Don’t: Think you get a pass – no amount of wealth/lack of wealth determines if you do or don’t need a budget
  • Don’t: Think budgeting is temporary 
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