Budgeting Allocation with PT Money
Summary: PT Money, one of the most influential people in personal finance and founder of FinCon, shares some tricks to make budgeting easier and more effective.<br> We all know we need a budget but that means something different to us all. For some it’s a restriction, for others a path. However you look at it, a budget is something we all need in order to meet our goals, financial and otherwise.<br> An effective way to budget for a one time expense like a house down payment or vacation is to set up a dedicated account that has a certain amount of money transferred into it automatically once a month. Depending on the situation, you can tap your emergency fund for a one-off expense.<br> Sometimes you have an unexpected expense, like a friend’s birthday party. If you didn’t have enough warning to set aside money for it, you may have to take it from another area. Or you can start an emergency fund for “fun” if you have a lot of these kind of expenses.<br> If you’re budgeting for a family, it can be more complicated. Do you use joint accounts or separate? What if one person’s income is significantly higher than the other’s? As we heard in <a href="https://www.listenmoneymatters.com/escaping-109000-credit-card-debt-travis-pizel/" target="_blank" rel="noopener">Episode 85</a>, communication is key. Discuss finances with your partner and agree on a system. For a couple with a large difference in income and separate accounts, using the bucket method is a solution. A percentage of each income is put into an account for shared expenses.<br> Pay yourself first is the most important part of any budget. Making sure to max out retirement contributions will go a long way towards this.<br> Spending one third or less of your income on housing is a good rule of thumb. Lenders and real estate brokers will try to push you above this but you don’t have to buy the biggest house on the block or a house that costs the maximum amount you were approved for.<br> Tracking your expenses is important. By keeping an eye on your finances, you can plug holes that you might otherwise have not been aware of. Phillip assesses his budget quarterly. For those of us new to budgeting, we may have to check in more often.<br> Don’t go crazy separating everything out. You don’t need a budget for the phone bill, the cable bill, and the electric bill. That can all be lumped under utilities. There will be less to track this way.<br> Remember, we don’t budget because we’re greedy or selfish. We budget so we can take care of ourselves and our family.<br> Show Notes<br> <a href="http://lagunitas.com/beers/dogtown-pale/#" target="_blank" rel="noopener">Lagunitas Dog Town Pale Ale:</a> A pale ale with notes of citrus and pine.<br> <a href="http://ptmoney.com/" target="_blank" rel="noopener">PT Money:</a> Phillip’s site dedicated to doing more with your money in half the time.<br>
