Budget Essentials: Planning and Saving to be on Target

A big part of savings that I write about each week, whether it’s in your supermarket savings or elsewhere, all contributes and shapes your financial destiny, and a budget is an important part of that.

Budget essentials: Planning and Saving to be on Target

If you wonder why I harp on budgeting, savings, and proper planning to insure you always have the ability to meet your expenses, I will admit there was a time when I didn’t plan well and save properly. I thought, “No problem, I always earn more each year, I’m young and healthy, and I have really good credit.” While that was true then, it’s not quite the same now. Today I have learned (the hard way, unfortunately) that earning potential is much more challenging. Age and health sneak up on you and planning your expenses and discretionary spending variables in detail (and yes, updating them) is truly essential.

Too many people don’t have a budget and wind up in severe financial trouble. If you’re not budgeting, saving money each month, and planning ahead, you may need to hit the lottery to get you through your future years. Everyone should budget, regardless of income!

Here are the essentials you need to cover when planning a budget:

  1. Emergency fund
    Saving and establishing an emergency fund of at least 6 months worth of expenses is the ideal. Once established, these funds come into play only if you lose your job, have a health emergency, or some other difficult event that you otherwise couldn’t survive financially. The funds you have saved in your special bank account help to prevent abusing your good credit and paying interest, losing your home or car, or losing your electricity. Paying yourself first isn’t just a catch-phrase, it’s a real lifeline.
  2. Actual monthly expenses
    Write down everything you spend to begin establishing your budget. Yes, everything! Go through your checkbook, credit card statements, receipts, everything. Even items that don’t occur monthly like insurance policies and household repairs need to be planned monthly and tracked. Once you’ve listed everything you spend your money on, you can set priorities based on your most demanding expenses. Food, housing, utilities, health costs must be at the front of the line. However, with careful planning, tracking, and saving on your various categories, you’ll still be able to budget for your holiday spending, entertainment, and other desired expenses.
  3. Savings
    Don’t forget to budget for your retirement savings monthly, either through your company paycheck or some other monthly investment or savings plan. And if your employer offers matching funds, make sure to take full advantage and not leave any money behind. Saving early and consistently is your best bet for taking advantage of compound interest and time to increase your nest egg. This becomes your best plan to insure a better retirement as a complement to Social Security benefits.
  4. Big purchases
    Make a line item in your budget for everything you spend, including that new car or vacation you want to take next spring. Many people do not include these kinds of items and then either spend too much, go into debt, or just have to cancel the purchase because they overlooked the expense for months and months. Divide your expenditures into monthly segments so you can meet your goals.
  5. Revise and update
    Don’t think that a one-time plan is good enough to last forever. Your financial health and goals are subject to frequent change and revision. Things happen…life changes, jobs change, and many other variables. It’s very similar to a business plan or what any corporate entity does each month. By looking closely, it’s much easier to see what you are doing, and where you are going.

By tracking your expenses, looking at your savings and budget each month, and revising when necessary, you’ll insure that you are on the right track now and for the future.

Do you have a budget established? How often do you revisit it?


  1. Hi, these are some great tips for budgeting. Vacations, family trips and last minute travels always seem to get lost when planning for a budget. Do you recommend a separate account for these types of savings?

    1. Travel and other goals can get lost in your budget sometimes, but if you set aside a certain amount every month for it, putting that away in a separate savings account can definitely help. Some savings accounts (for example, Capital One 360) even let you label different portions of your money for different goals. Thanks for stopping by, Pyper.

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