COVID-19 Community & Small Business Resources

Support Here

What can we help you find?

All Articles

Creating a Budget in the New Normal

I never kept a budget until I started talking about it; I didn’t think it was important. Frankly, no one ever told me it was important either! But it is very important. Like others in my age group, I was spending money (wasting, really) each month for silly things like lattes and other items at the grocery store that I didn’t really need. All those $5, $6 and $10 items added up to be a lot more than I thought they would – and a lot less important than they should be. 

Bad Habits are Meant to be Broken

Some people that I work with today are very organized. They have a budget and an expense sheet all laid out for me to look at. Others are not as organized and have no clue what is incoming and outgoing each month.

A lot of people who budget include fixed expenses, those that stay the same each month, such as their car, rent or mortgage. It is not surprising that fixed expenses take up nearly half of many peoples’ income today. 

Unfortunately, people tend to miss the variable costs – groceries, utilities or gas for the car –that vary every month based on consumption, and seasonal expenses like holidays, birthdays, winter snow removal and summer grass cutting. When seasonal and variable expenses are overlooked as a result of their not being paid on a regular basis, the budget becomes skewed.

I think of budgeting as a written document that simply shows what is coming in and what’s going out each month. But I also think of budgeting as the road to financial freedom and success. Without it, you simply cannot have that stress-free, worry-free, sleep well factor. Budgeting can also lead to a happier retirement. So I have created my own budget for people to use, which I often talk about in my seminars and webinars.

One of the things I have built into budgeting is a flat 10 percent that comes out of what it is coming in every single month. No matter what, pay yourself first! This is a non-negotiable that is automatically taken right off the top. This will allow you to make saving a priority. You need to be saving for yourself, whether it goes directly toward your retirement or toward your emergency fund. After a while, you don’t miss it and will be thankful you did it. But, truthfully it is easier to start this way, you can’t miss what you never had and you learn to live without it.

The SMART Way Toward Retirement

You are not alone; a lot of people forget to pay themselves first. They’ll say, “I need to be paying off all of my debt, or my loans, or get a boat before I can start doing that.” No. That is a cop-out. You need to create a balancing act between your debt repayment plan and your personal commitment to pay yourself first. In the overall scheme of things, 10 percent is not an exorbitant amount. But it is worth so much more in the long run.  

It’s scary how some people – actually, 52 percent – cannot cover an unexpected $400 expense without borrowing money or selling something. The majority of our country –78 percent – is living paycheck to paycheck. If this includes you, and you are not budgeting, how are you going to come out on top every month without falling deeper and deeper into debt? Wealthy clients, for example, manage their money; their money doesn’t manage them.

Budgeting is a personal thing. Budgeting strategy is not the same for one person as it is for another. I believe in making it realistic so you are consistent with it from month to month. For example, every Saturday morning when you have your coffee, spend 10 minutes putting the information in. Others may do it when they get a bill, or wait until the end of the month and then sit down with everything. Some people like to use apps or Excel sheets. Basically, it comes down to how we make it work best for you. Together, we will find your niche.

Clearly, you cannot have a successful retirement without having your goals in mind and knowing what you are trying to achieve. If you don’t know your goals, you will not be able to budget for them. In my five-step method to budgeting, the first step is to set SMART goals.

S pecific: Who, what, where and why. Why do you want to achieve this goal?

M easurable: How are you going to track that goal?

A ttainable: Are your goals challenging, yet attainable?

R elevant: Are your goals relevant and worthwhile?

T imely: When will your goal be met? Is it short term, like paying off your credit card debt in less than a year? Or is it long term, like wanting to buy a house in ten years?

We Are Living in Unprecedented Times

You have both the time and the ability to put your finances first. The COVID-19 pandemic has made it so that right now is an opportune time for you to get your financial house in order. As the economy slowly and strategically reopens, our lives and activities will begin to pick up and normalize. By acting now, you will have created a better foundation for your future.

In my upcoming “Budgeting Basics: Get on the Road to Financial Freedom” webinar, I will help you do that and a whole lot more. I want to help people like you become financially independent by sharing my knowledge so that you can pay it forward.

It has been my experience with The Weber Group at Hefren-Tillotson to know that anyone (and everyone) can make budgeting a priority by learning what works for them. That’s why I feel it is important to show people the meaning and importance of budgeting so that it then becomes important in their minds. Why wait until tomorrow, for what you can do today? 

If you would like to learn more, please attend my upcoming webinar on Wednesday, May 20, at 12:00 PM ET by registering online at here.

I would love to talk with you about taking that first step toward your financial freedom!

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills. MEMBER SIPC.