This past week on Glenn Beck’s website, there was an insightful post about the basics of home defense readiness. In introducing the topic, the author made a stirring point: “When designing any emergency response plan, it is important to first identify the most realistic threat you are likely to face… Mounting a defense against the threat you are most likely to face will help manage your fear and your finances in equal measure.”
So what is the most likely threat that most Americans will face? While natural disasters are of concern, the greatest overall threat in recent years has been that of unemployment. According to the United States Department of Labor, the median duration of unemployment was still standing at more than four months as of March 2013. With such staggering statistics, there’s never been a better time to get a budget firmly in place. Sticking to a budget not only helps families live within their means, but it also can create a growing emergency budget fund, in case the unexpected happens (natural disaster, job loss, economic crisis, home damage, etc.).
Here are five timely tips about the best ways to make and keep a budget:
- Start Tracking: There’s no way to know how best to budget if there’s no knowledge of how your money is currently being spent. Finding an online solution that tracks all of your spending—cash, credit, debit, auto-pay bills, etc. This is the best way to accomplish this quickly and effectively. Try top-rated online budgeting tools including Mint, Personal Capital, and BudgetPulse.
- Make a List: Once there’s an understanding of where your money is going each month, there’s the ability to clearly list out what expenses are “needs” and what are “wants.”
- Set Clear Goals: A great budgeting tip is to make financial goals that are defined and specific. For example, don’t make one of your goals to “save.” Save for what? College, new house, emergency supply? Once you define what your budget is for, you can establish certain amounts and ways to accomplish it.
- Pay Yourself First: Kim Kiyosaki, wife of Rich Dad author Robert Kiyosaki, shares her insight: “For every dollar that came into our house, we took 30% off the top before paying any bills—10% went into a savings account for emergencies, 10% went into an investment account, and 10% went into charity or tithing.”
- Withdraw Often, as Needed: It’s easy to spend with plastic. Since there is no real exchange of actual money, you don’t always see what’s leaving your pocket or bank account. Try withdrawing cash from the ATM at the first of the week. Only withdraw what you want to spend, and when it’s gone, it’s gone.
With so much that can happen unexpectedly, the most important thing to remember about budgeting is that timing is everything and there’s never a better time to recommit than right now.