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Sunday, June 21, 2015

The Secret to Happiness is.....

A Budget!

Not what you were expecting - right?

Well.... I'm not an expert... but I am 52 years old and been witness to quite a few situations and relationships.

So let me lay this thesis out to you one layer at a time.

Education is important.....way up there.... having a vocation that provides an income that will support your lifestyle.

But without a Budget, you will just spend whatever you make, however much it is.  Been there, done that.... seen that.

So you need a Budget.

Success in a Relationship depends on you finding someone who you have something in common with and who you love and respect and trust.... but if you can't agree on money and how that money is spent, i.e. a Budget, it won't matter.... your relationship will likely fail.

You can teach your kids good manners, how to study, how to play well with others, whatever, but one of the best things you can do to prepare them for life is teach them how to identify, track and control their spending as defined by a budget.

So what is a Budget and how do you make one?

A Budget in it's simplest form is a list of your recurring / monthly / annual / repetitious expenses.

The simplest way to create a budget is to take a sheet of paper, draw a horizontal line across the top and a vertical line down the middle and label the 2 columns "Expense Item" and "$" and then just make a list of your expenses.  Here is a basic list that can be added to or edited to meet you or your family's needs:

  • Vehicle Insurance
  • Vehicle Maintenance
  • Vehicle Gas
  • Vehicle Parking
  • Rent or Mortgage Payment
  • Rental or House Insurance
  • House Maintenance
  • Health / Medical / Dental Insurance
  • Out of Pocket Medical
  • Utilities - Water, Gas, Electric
  • Cable / Internet
  • Cell Phone
  • Groceries
  • Supplies / Consumables
  • Eating Out
  • Hobbies 
  • Clothes / Personal Items
  • Educational Expenses
  • Short Term Entertainment
  • Vacation
  • Birthday gifts
  • Christmas Gifts
  • Miscellaneous
Track the cost of the list for a few months to get a baseline for your expenses.  Keep your receipts and throw them in a folder and total them at the end of the month.

This may sound like a pain in the neck, but it will pay huge dividends because, as a minimum, you will be forced to face your spending habits.

Once you have a baseline for each item and the monthly average, look at the top 5 expenses and see if you can reduce these in any way.

For example, I found out from my son a few years ago that the county in Texas where I lived had competitive rates for electricity.  I went to the website and found the cheapest short term (3-6 months) rate.  It saved me about 40% on  my electric bill which amounted to almost $200 / month.

Recently, I cut my cell phone bill by calling Verizon and asking for a lower rate which reduced that cost from $121 / month to $76 / month and cancelled my AT&T Mobile Hotspot which I hadn't been using.  This was an additional $53 / month, so I cut my cell phone / mobile communication bill from $173 to $76 / month.

One of the things I have realized over the past 10 - 15 years is that controlling your budget is more important than how much money you make.

For every $1 you save on your budget, you reduce your need for earnings by a minimum of $1.40.

That is a HUGE and POWERFUL Financial Concept and Practice.


Is Creating and Following a Structured and Disciplined Budget the Most Important Factor for Success and Happiness in Life?

Try it for a year and see what you think.

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