Budget

Your budget isn’t working because you’re not focused on needle movers 🎯

The needle movers often aren’t your discretionary spending.

Let’s break down my family’s for example:

→ Coffee: can’t live without it.

→ Travel: typically a trip to Maryland every two months to see family. Occasionally a bigger trip.

→ Eating out: Typically 1-2 times a month. Our lowest discretionary expense.

As much as our high school economics teacher drilled into us that spending $4 on a cup of coffee is a terrible financial decision. If your plan comes down to that, we have bigger issues.

If we were to cut to the bone the three mentioned discretionary categories, we’d save maybe $3,000 annually. Nothing to sneeze at, but not a needle mover.

What we need to be focused on is savings rate and NON-discretionary expenses.

💸Benchmark savings around 15% of gross income

Most common non-discretionary expenses:

→ Housing: Benchmark ≤ 28% of your gross income

💡This is often the biggest needle mover for your budget.

→ Groceries: Most variable non-discretionary, depending on location, food preference, allergies, etc.

💡Outside of housing this would be the largest expense monthly. Develop a meal plan where you buy more bulk items rather than one-offs to reduce costs.

→ Car (Pmts/Gas): Paying off a car loan is an important step to financial independence. Vehicles are often liabilities, even if they are considered assets on the balance sheet.

Need help setting up your budget and cash flow? Schedule an appointment!

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