How to Budget and Save Money - Master Personal Finance In Money Hacks by Chase Roosevelt Book Review
Inflation and Recession is the time when people find it very difficult to manage finances.
It becomes very critical when you tend to spend more than you earn and cannot save up for a rainy day.
This book will empower you to take charge of your situation and turn things around.
Can I Live Without a Budget?
The author says that we cannot fix something that we don’t know is broken. He says that if you are not aware of your assets and liabilities, you will never know what’s happening around you and your finances.
Until you map out, write it down, and see the whole picture, you will never be able to navigate to calmer waters in life.
You must write down assets and liabilities, so you know where you stand financially. Our finances make us or break us in a lot of ways, so it’s critical to be aware of where we financially stand.
By assessing our financial wellness, we will be able to decide what adjustments we need to make in our lives, from spending and saving to earning.
“Your budget can tell your money to go rather than thinking where it went.” – Dave Ramsey
Here are some steps to assess your financials to start with.
Assess your net worth.
Calculate the debt-to-income ratio.
Evaluate your housing situation.
Find where you are spending more money.
Setting your goals.
Making your budget.
Saving for your future.
The author uses the “SMART” goals technique to explain how to set financial goals in a structured manner. Budgeting is important to beat inflation, and it is equally important to do it in a structured manner.
‘SMART’ is simply the acronym for “Specific”, “Measurable”, “Attainable”, “Relevant,” and “Time-bound”.
Some TIPS are shared to make things easier for you to start your SMART goals.
Make an action plan.
Set a savings deadline.
Create a different account for every goal.
Keep tracking your goals.
Break your goals down.
Automate your goals.
Budgeting for Inflation and Recession Made Easy
The author rightly says that Inflation is a silent budget killer. When inflation increases, it silently but visibly decreases your buying power.
Higher prices mean that you either need to generate another source of income to beat inflation or cut down on expenses. Easier said than done though, cutting down expenses is the most difficult thing to do when you are so used to the normal.
The new normal takes time to build into your mind, but the impact on the ground can be seen already.
There are some things that the author suggests to adjust your budget and save during inflation. It is easier said than done, but you will eventually have to make that decision.
Slowing down your debt repayment and paying only minimum amounts due on your credit cards is your tough ask. These can overburden you if you cannot manage these payments in the future though.
The author suggests streamlining mortgage costs and reducing interest rates on your debt to beat and adjust your budgeting during inflation.
He also suggests making lifestyle changes to reduce expenses you would normally have. Postponing vacation plans or putting them on hold can be a wise idea to rather save up more.
Chase suggests reining in on some costs in crucial spending categories during inflation.
Food – Dining out.
Cars – Avoid the new car for now.
Major appliances – The cost of major appliances tend to skyrocket.
Energy – Use wisely during a mismatch in demand and supply.
Internet and Telecom services – Ease extensive use.
Preparing for a possible recession and budgeting may go off the loop when one hears the term recession. However, the author shares some simple tips that you can do to plan the budget for the recession.
Group your daily and monthly expenses
Create an emergency fund.
Limit your existing debt.
Find one recession-proof job
Diversify your income.
Live within your means
Prepare an emergency plan for your investments.
Budgeting – Before and After You Receive Your Payout
The author elaborates on how to plan your budget before you receive money and after once you do. It might sound very simple and basic,, but this is what many people fail to do. This results in them not being able to manage expenses and save for rainy days.
It’s all about doing the Math and calculating how much of your pay is being withheld. You may want to adjust what is being withheld to either reduce it or avoid it if possible.
You may also want to make sure you are aware of all the employee benefits and utilize them. Employee benefits can do a great deal of help in reducing those expenses when it is needed the most.
Roosevelt says as a freelancer, it is all the more difficult to create a budget as incomes can be irregular here. When dealing with irregular or variable income can be difficult, it helps when you receive some tips on it.
Here are a few points shared by the author may work well for the employed lot.
Setting a baseline – Budget based on the least paid month of the year.
Paying yourself first – This is probably the most important aspect you should do as an employee or self-employed.
Think in percentages – Always budget in terms of percentages so you have a fixed number for a group of expenses.
Budgeting every payment or check – Split payments received into groups for each expense category you have grouped.
Set aside money - Set aside enough to pay up taxes.
Set aside money – Set aside money for savings and investments. Treat savings as an unavoidable expenditure.
Insurance – Plan your budget to cover the extra cushion you may need.
Can I Still Save After a Budget?
Well, when it comes to saving money, the most difficult thing may be just getting started. You may think you start saving the moment you create that budget.
However, that’s only where you start. Saving money has to be done as diligently as you create your budget. Here are some tips shared by the author that have been elaborated on in the book.
Include savings in your budget.
Highlight ways to cut your spending.
Set saving goals.
Pick the right tools.
Make savings automatic.
The key here is to revisit saving goals to ensure that you give it a top priority and a ‘Must do’ line item.
When it comes to budgeting and saving, all you get are pieces of advice. There is always that void on how to get things done.
Chase Roosevelt has done a great job in making things crystal clear in the book and sharing some amazing tips.
Get your copy now if you don’t want to miss any of the tips shared in the book on how to effectively budget and save money.
(Amazon paid link)
Guest Post - Written by Mr. Lal Bajaj, Bangalore
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