Wednesday, January 23, 2013

The all important budget

I have a budget. That does not mean I have some time consuming paper monster devouring time and crimping my day to day style. A good budget does just the opposite. It allows one to spend freely, meaning without concern, because one knows the limits.

I use Excel for my budget. It is a good, solid bit of software that is very easy to use. There are lots of budget approaches posted online. Find one that appeals to you and modify it to meet your needs exactly. One strength of Excel is that it can be modified after you have started using it. Nothing is etched in stone. Add columns and rows with rarely a problem.

I got an e-mail the other day from the Morgan dealer, and yes there is still a dealer for my Morgan roadster. He was ordering tires from Europe and needed to know if he should order a set for me. I fired back a reply: "Yes." I didn't even have to think about it. New tires for the Morgan are in the budget.

If we see something nice for one of our granddaughters, we invariably buy it. Why? Because stuff for the granddaughters is built into the budget. The amount isn't open ended but generous. I feel confident spending the money.

How do we keep from blowing our budget? We charge everything that we possibly can. Once a month I update our budget expenses using a printout of our credit charges. I fill in the fields for our actual expenses in the preceding month and note whether we can in budget or not. If we are running a little over, I rein in our spending in the coming month. This rarely happens. One develops a feels for ones budget over the years.

A good place to start developing a feel for budgeting has been posted by the Royal Bank. Follow this link: Retirement Cash Flow Calculator. There is also a good expense worksheet for calculating your cash needs in retirement. This calculator works for both those approaching retirement and those already retired.

Knowing where you are at financially is not difficult but it is important. Knowing one's limits is actually very liberating.

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