Financial Responsibility - Where Does it Start?

By JoAnn Young,  Mortgage Broker & Real Estate Agent, Brevard County, FL  321-243-4917

Good morning friends and blog readers!  Lately I have been involved with teaching a young man a little bit about finance and budgeting.  I was his same age when someone showed me how to have a budget book and actually helped me set it up.  I have lived by this book and the principles and concepts for over 25 years and have never had an unpaid bill - even through unemployment in the mid 90's and other eras of financial crisis.  I would like to share a few key points in helping a young person get started as I've observed and have used in helping this young fella get started on his financial journey through his life.

1.  You cannot have a budget without a job.  Stating the obvious I am sure!  You have to start somewhere.  If you are not retired, income is a must.  If you are having difficulty finding a job.  Keep searching for one and spend as many hours searching as you would working one.  Learn how to write a resume',  techniques for interviewing and put on your walking shoes and start knocking on doors.  Employers know you are serious when they see your face & shake your hand.  They also see the initiative that someone really does want to work because you are out making contacts.

2.  Once you have a job, sit down and write out your goals.  Prioritize your goals and put them in the order of importance on a sheet of paper.  Start two columns.  One labeled "Needs" & the other labeled "Wants".  If your need or want is to buy a car with your income, write it in the appropriate column.  If your goal is to save up money to go to college, put it in the appropriate column.  If you need to pay rent, this item should go first as it is a "need" not a "want".  There are items that will be needs that will take up a good portion of your pay.  Don't be alarmed.  This is realistic.  This is life!

3.  Plan a budget.  Those items in the "needs" column must be itemized.  Figure out how much each will cost per check.  If you are paid weekly, set your budget to pay those items weekly.  For instance, if you find that putting gas in your vehicle costs $160 per month, set a budget for 4 weeks (4 average weeks in a month) and divide up into 4 weeks.  You will set $40 a week aside to buy gas for your vehicle.  Do the same for rent, groceries, etc.  If you are paid twice a month, divide by two.  Once all of your needs are categorized, you can then plan how much you will spend weekly on just yourself.  This item of spending is NOT a priority but needs to be categorized.  Trips to the movie rental machine, additional clothing, entertainment, out to eat, Internet shopping, gym membership, extra money for gas to get to those entertainment spots or the gym.  Everyone likes to have spending money but it has to have boundaries.  Do not budget for spending money until all of your "needs" are all categorized and are realistic.  For instance, do not put $30 a week for groceries down when it is actually $50.  You know how you spend.  If you are not sure, start keeping receipts and total up what you spending on your needs.  Whatever is left over after your needs are categorized, is what you have to work with for spending.  If you feel you are in the "red" or don't have enough, you need to work more hours at your job, get a part-time job or get a better paying job that will give you more per hour for your time.  You must also have an "emergency" fund set up for things that come up that you absolutely have no control over.

4.  Once you have your budget in place, do not vary unless emergency.  Say "NO" to that urge to splurge!  Once again, you have to start somewhere.  You will not reach your goals and wants if you overspend and you control these items.  Sometimes you just have to say "no" to those extra outings with friends or that item that you've been wanting and no longer want to wait for.  The road to success and achieving your goals is not going to be paved by your friends. Instead, start thinking of things you can do with friends that do not cost money.  Make a list and decide to do.  When you have no plan, you WILL spend and will more than likely spend more than you intended.  You must have a boundary.

5.  Use coupons.  I know, it's not cool.  But so what?  It's your money.  It goes further when you get a dollar off here or something for free somewhere else.  Subscribe to online blogs where they alert you to freebies and coupons.  You know the old adage "Easy come, easy go"...it works in reverse with coupons and it only takes a few minutes to print a coupon or clip from the newspaper or mail piece.

6.  Shop online or at thrift stores to find better deals on your needs or even your wants.  Be willing to wait patiently for a deal.  Humans get the idea that we have to have it right now and that is where we get into trouble.  Shop around for those items.

7.  Be disciplined.  There's no sense in having a budget if you are not disciplined enough to follow it.  It is the same if you are trying to lose weight.  You count calories all day and exercise and blow it with late night snacking.  You have to put safeguards in place to keep from "binge eating".  In your budget, you have to put safeguards in place for "binge spending".  How will you handle spending your gas money on going out with friends and having to wait 1-2 weeks before you have spending money again because rent or our car payment is due??  Do you deprive yourself later or do you have self control and discipline now?  Don't "rob Peter to pay Paul" in your budget.  You will get behind.  You will then will find yourself looking for a part time job to pay for those extras that you feel that just cannot live without.  There goes your free time.  If you have to get a part time job because of undisciplined spending, then it is no longer "free" time.  And let me say here, DO NOT BORROW because you did not control your spending.  This is a lack of financial responsibility as well as not having your priorities in order and immature spending.  We want to see you make it with your finances.  Those from whom you intend to borrow do not want to see you with your hand out asking for more when you had it in your hands already.

8.  The last part of your budget - saving!  Once you have your needs and wants separated, you can figure out how much weekly you can put away for saving for that goal.  There is a great sense of accomplishment that you saved for something and spent well when you pay cash for an item.  You are also more cautious with your money when you pay cash.    Sometimes we save up for an item and the price has come down by the time we are ready to buy it OR we find out that we no longer wanted that item as we thought.  It is very smart to save up for an item than to borrow for it.  Do not get into the habit of borrowing. Especially if you don't have enough income to pay it back.

One of the best books I ever bought (and I may have even borrowed it) was a book titled "The Tightwad Gazette"  by Amy Dacyczyn  aka The Frugal Zealot.  Though some of her tips were "out there",  I learned so much from just the concepts in the mid-90's that have carried me through my financial journey.

There's so much more to learn about setting up finances but this outline is just the start of financial responsibility.  It works!  If you stick to it, you are on the start of your journey to financial success!
Call JoAnn Young, 321-243-4917 or email me at JoAnn@MyFLDreamHome.com .