Creating a budget can ease financial worry
Stress for Success
May 5, 2008

How far will housing values plummet? Or gas prices rise? Is your job safe? Do you have enough money to get you through this downturn? Stress!

We can learn from smart real estate agents who’ve been through these ups and downs before; rather than overextend themselves during the good times they save more to get through the rough patches.

Unfortunately, many families have not done this and are ill-prepared for any economic downturn. Their financial anxiety often leads to alcohol and drug overuse, physical and emotional symptoms, and even increased domestic violence.

There are only two ways to have more money:
§ Earn more
§ Spend less
It’s simple.

If you’re worried about your finances, take control of how you spend what money you earn. Create a budget and live within it.

The first step is to know how you’re presently spending your money. For several months fill out a monthly spending record. Create a table with eight columns labeled: “category (under which list those below),” “week 1,” “2,” “3,” “4,” “actual,” “planned,” “plus or minus.” Then, list every cent you spend on:
§ Mortgage or rent
§ Groceries
§ Eating out/entertainment
§ Transportation
§ My clothing
§ Kids’ clothing
§ Debt repayment including credit cards
§ Insurance
§ Taxes
§ Utilities
§ Miscellaneous: haircuts, alcohol, medical, etc.

The first month is to track where your money goes. Study your spending habits. Identify in which categories you can decrease your expenses. In which categories are you spending more than you expected? Identify and avoid what keeps you overspending.

The following months are to create and stay on a budget that honors your priorities.
Next, compare your expenses to your income. The greater the deficit obviously the more cutting you’ll need to do. If necessary, to live within your income, debt restructuring can almost certainly be arranged by talking to your creditors before you miss payments (or miss too many.) Your income minus your essential expenses is the amount you have left to divide among your creditors. Call them. It’s better than filing for bankruptcy, which 2005 legislation made more difficult.

Be balanced in your approach, however. Don’t obsessively keep track of your expenditures year after year. The fear that drives this can also block your ability to think creatively on how to earn more and spend less. Also, even Debtors Anonymous recommends that you not totally deprive yourself when getting your finances in order. Set aside a small amount of money each month, within your new budget, of course, for special things for yourself and family.

Next week we’ll look at a plethora of ideas on how to cut expenses to keep you living within your means.

Suze Orman says, “… to have the capacity to take control of our lives – regardless of our bank accounts – commit to making the right (spending) decisions for ourselves and our family … (putting us) on the road to happiness. When you’re happy, you create your own financial stability by living within your means.”

Jacquelyn Ferguson, M. S., of InterAction Associates, is a trainer and a Stress Coach. E-mail her at www.jackieferguson.com with your questions or for information about her workshops on this and other topics and to invite her to speak to your organization.