Budgeting Tips for Newbies: The Mid-Month Review

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Writing a budget is a chore.  It doesn’t matter if you are a proven veteran or a 2012 New Year’s resolution baby.  The fact is that it takes work, it takes tenacity and it takes discipline.  I have learned a lot about budgeting throughout the years.  Most of it has been trial and error.  One thing that I do every month is the mid-month review.  Today is January 14.  If you started budgeting at the first of the year, there have been some interesting dynamics in the last two weeks.  Whether you are paid weekly, bi-weekly or twice per month, you have more than likely received some compensation by now. You have also had enough time to receive a few bills (some expected, some not so much).  This is a great time to take a couple of action steps.

First, you will want to spend a few minutes reviewing the current month’s budget.  How does your income compare with what you projected when you originally created your budget?  Have you been able to increase your income through the sale of unwanted belongings or a part-time job?  What is the progress of your emergency fund (if you aren’t to $1,000 yet).  If your income isn’t where you thought it would be, you may want to make an adjustment for the next two weeks so that you don’t find yourself upside down at the end of the month.  How have you done with your bills?  Have you been able to pay everything on time to this point?  have you been answering your phone?  Have you been able to reduce your monthly payments to your creditors?  Have you been able to reduce interest rates?  Have you found “fat” in the budget that you have successfully removed through “financial lyposuction?”  While some of these things may seem like common sense, this is a good checklist for you to use if this is your first time seriously budgeting.

I know this may seem like it’s a bit premature, but you should also be thinking about your budget for February.  While this month’s victories and mistakes are fresh on your mind, this is the time for you to push forward to February’s numbers.  One thing to keep in mind is that your pay periods may be off due to the fact that February is a short month.  Just because there are less days and pay periods may be affected, one thing is for sure:  the people who send you bills expect to get paid.  If you looked at your progress in January and just can’t seem to figure out how you are going to fund your emergency fund, I would like to offer another suggestion.  Look at your tax withholding.  If you are used to getting a huge tax return every year, STOP!  Take a look at your W-9 and figure out how to maximize your take home pay without owing money at the end of the year.  Then, commit to use every bit of this “found money” to transfer into savings.  One seamless way to do this is to is have it moved electronically.  When you find out the new amount you will be taking home every pay period, take the increase that you have found from adjusting your withholding and have it electronically transferred into your emergency fund.  Your take home pay will be the same that it always has been.  However, instead of you giving your money to the government all year, you are insulating your financial position from unforeseen circumstances that would otherwise impact your credit card balances.

I am going to continue to push you in this process.  I will be the voice in your ear throughout the month, making certain that you stay on track.  First budgets aren’t perfect.  Second budgets aren’t perfect.  However, with the experience of our team in conjunction with you beating the learning curve in real time, you will be writing a budget of perfection in no time at all.

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