Photo by: silent-shot

It rained all last week here in the AZ, and the wife and I passed our fair share of accidents on the road.

Coming from a slightly wetter climate than my wife, these sightings often lead to short conversations between us about driving habits between different states.

The thought I always seem to return to is that when roads are wet they play a trick on you.

Most of the time you feel just as in control as you are on a dry road, and most of the time you might be. But it only takes one awkward puddle, or slick spot, or glare (or another bad driver) to take that control away. And on a freeway that’s all it takes.

The best thing, as most people know,  is to simply give yourself a reasonable buffer between you and other cars.

Some months, for my family,  it’s tempting to live right at our means, or even beyond – but it’s just like hugging a car on the freeway. Most of the time we’ll get through the month just fine, but it only takes one instance of “life” to take that control away.

Try to live within your means and give yourself a bit of a buffer. The more you save each month, the safer you’re driving. You may run into heart pounding situations (that may leave you using colorful language), but you just might have enough room to avoid an emergency.Similar Posts:

Photo by: notsogoodphotography

Contrary to popular belief, I’m not very passionate about budgets.

Budgets are kinda boring.

Ok, they’re very boring.

I am, however, passionate about the benefits of budgeting.

• I love showing people how to be in control of one of the most influential factors of their lives.
• I like sharing how to stop wasting money on things you don’t value.
• It’s impressive to me when somebody knows their 95% enough to say ‘no’ to something they can’t afford.
• I get excited about someone buying something they really want, and knowing they can afford it without credit.
• I love the idea of parents falling asleep knowing their family’s needs are met this month.
• It’s exciting to think that people are using their budget to put a little away every month.

And it’s fun to write, and post, and hope it makes a difference.Similar Posts:

My Awesome Nephew

A little early for a Christmas picture, isn’t it?

Well, that’s actually the point today.

Last week I wrote about Budgeting for Expected Costs, and my little sister (who, on a side note, is a thrift store ninja master) brought up that the holidays are a perfect example.

Most of us are planning on spending at least some money for the holidays. (Wordy debates of how right or wrong this is can be found all over the internet if you want to join one.)

Now is a great opportunity to start building funds in your budget for trips back home, gifts, parties, home-made-gift materials, ugly sweaters, Pink Nightmares – anything you and your family might do to celebrate in your own way.

You can make categories – as general as one big “Christmas” category, or as many specific categories as you might want – and fund them as money comes in, or move funds in them from less important categories for a while. The more funded they are, the less inclined you might be to go beyond your means this year – and the less guilty you’ll feel when you find the perfect gift.

How do you use your budget when the holidays start?Similar Posts:

• Simple ways to save money by using a budget

Photo by: Joop Dorresteijn

Building a Strong Budgeting Foundation

Still Standing

Over the weekend my wife and I had a great conversation with some youth about foundations and roots. We discussed the forces that might be working against a building, or a tree, that might bring them down – and why they would need a foundation (or roots) to withstand those forces.

Our conclusion was that good foundations and good roots need two qualities:

They need to be deep and they need to be strong.

We have many foundations in our lives and our 95% is a big one. It not only “keeps us up” from month to month, but also helps us weather storms and constant change.

The two principles of a good foundation seem to correspond to the two main budgeting principles I try to evangelize here on WithinMeans:

Living Within Your Means Will Make Your 95% Deep

As you use a budget to actively spend less than you earn, your wealth and safety will increase from month to month, a little at a time. Your financial foundation will get deeper and deeper, and you’ll find yourself weathering unexpected costs better.

Budgeting Needs Before Wants Keeps Your 95% Strong

Spending money on what you want, then hoping you have enough for your needs, is a weak foundation at best. If your needs are budgeted first every month you may see some erosion on your wants, but the important things will always have what they need to keep you standing.

How else can you deepen and strengthen  your 95%?Similar Posts:

I’ve wanted to post this quote for a while:

Anyone who lives within their means suffers from a lack of imagination.
— Oscar Wilde

Ouch, Oscar… mega ouch.Similar Posts:

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Inconveniences suck, but they’re better than emergencies. Being stuck in traffic, for example, is worlds better than being in an accident.

Last year our car had some problems with its struts (yuck) and we had to fork over a lot of money to keep it functioning.

Was it a punch in the gut?

Yes… yes it was.

photo by me!

But was it a financial emergency?

Not this time.

Every month we had been adding a little money to our Short Term Savings on our budget. When the situation came, we had enough to cover it.

And if we’d hadn’t had enough in that fund yet, we’d have known exactly where to have taken money from – our least important wants – all organized in our budget. Everything was in order, and we were going to be fine.

Things like this happen to everyone, all the time, and they often come in groups. Unexpected expenses are part of life. Unfortunately, none of us are truly immune.

Expect them and get through them.

This situation had the potential to be more than an inconvenience – it easily could have put us behind on bills or other important needs. But by having a small fund in our budget for “life,” we turned it into an inconvenience. We paid cash, felt sick to our stomachs for a while, and slowly built our short term savings back up.

Make sure your budget has a category for short term savings (you can keep it in a simple savings account if you want) and add a little to it each month. Even if it’s only ten bucks or so, get started!

And when life happens, instead of panicking (or borrowing), brush yourself off, let out a heavy sigh, and start your short term savings over again. Turn your potential emergency into an inconvenience.Similar Posts:

• Adjusting your budget to match your spending
• Simple ways to save money by using a budget

You’re in that moment.

You’re at a store and you see something you want. You start running numbers in your head. Can you afford it? If you get it, will you still have enough left for that upcoming bill? Will you have to put off that trip you’ve wanted to take for another month?

To buy, or not to buy?

When you’re staring at that price tag, it can feel like you’re in a maze and the hallway you’re looking down only turns left and right. You can’t see around the corners, the consequences aren’t clear, and you’re not really sure which way to turn.

Photo by: edlimphoto

• Will you run into trouble? (It will eat into your Needs.
• Will you hit a dead end and have to backtrack? (Delay the purchase of something you value more.)
• Or is it perfectly okay to buy it right now? (Green-light to the exit!)

Want to cheat?

Your budget gives you part of the map, so instead of your in-the-moment perspective you get a top-down-view of the maze.

Photo by: kelp1966

Glance at your budget before you go shopping and you’ll always have a solid number in your mind of what you can and can’t afford.

With this top-down-view you’ll know if it leads to trouble, a dead end, or an exit.

The maze is always changing. Fortunately, it only takes about 3 minutes a week to update your map.Similar Posts:

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Let’s call that your 100%.

There are hundreds of thousands of highly paid, highly intelligent, and highly trained individuals out there whose sole purpose is to help you maximize what you do with about 5% to 10% of your income: your savings. They help you save it and help you invest it. They know lots of fancy financial things and use lots of fancy financial words, so you don’t have to. They’re great and your savings should be getting a lot of attention.

So what about the other 95% of your income – the 95% that you work with every day of your life? The 95% that you take to the grocery store, and pay the rent with, and take your family out to eat with?

How much attention is it getting?

Your 95%

That 95% is one of the most important and most influential aspects of your life. It’s a huge factor in your lifestyle, your relationships, and your options. Of course, it does not define you – but big or small your 95% deserves your attention and care just like your other 5%.

That is why WithinMeans is about budgeting.

Budgeting puts into your hands a simple tool to help you manage your 95% and make sure you’re using it to make you as happy as possible. And you don’t need a finance degree to budget your money well, just a basic understanding. You can keep it simple and easy, and see life changing results.

What are you doing with your 95%?Similar Posts:

• How To Turn Emergencies Into Inconveniences