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.
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