Budgeting
I won't disclose #'s, but I will outline my budgeting strategies :)
Budgeting is important because it helps you manage your money and plan for your financial future. By creating a budget, you can keep track of your income and expenses, set financial goals, and make sure you have enough money to cover your bills and save for the things you want. It also allows you to identify areas where you may be overspending or areas where you can cut back. As a person starting out in their career, budgeting is especially important because it can help you establish good financial habits early on and set yourself up for success in the long-term.
What are my short term goals?
Determine eligibility of Roth IRA Contributions (CPA necessary)
Max 401k, HSA contributions
Have $X in personal portfolio
Payoff > 50% of car
These goals are ambitious, but with proper strategy can be executed properly.
What are my long term goals?
Reach $5 million in investments (non-liquid counts, i.e. house, CDs, etc.)
Start investment fund for kids as soon as they're born to plan for college payment (if they decide that is what they would like to do)
Become a part time subsitute teacher for fun
Budget Breakdown
Mortgage
30%
Groceries
6%
Loans
12.5%
Insurance
2.5%
Subscriptions (Amazon etc)
1.2%
Gym
.6%
Fun / Gifts
1.5%
The breakdown above gives me a savings rate (or investment rate) of around 55%. Obviously I am not exact on every month but these are the bare minimums required to spend my income on. Given I would like to pay more down on loans, I will utilize more of the remaining to do so, probably another 5-10%. I usually invest about 20% - 30% of remaining net income on portfolio investments. The remaining is variable, which is not my favorite thing. I either save it if I haven't use my credit cards for much that period, or pay them off.
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