Emergency funds are tricky things. While my husband and I steer towards the 6-8 month emergency fund mark, others are comfortable with the 3-6 month timeline that is most commonly recommended. Still others prefer to have a full year’s supply of cash on hand. Let’s walk through how to determine how much should be in your emergency fund.
Something that I learned very quickly in the three years that I taught music lessons is that the profession has significant seasonal fluctuations. There is a massive swell in September, when kids are going back to school and parents are setting up extracurricular activities, and another less severe swell in January when all of the Christmas gifts of music lessons come rolling in. Summer, though? June, July, and August are dead months. Even granting a “free” week a month didn’t stop me from losing students.
I have talked the virtues of a budget up the wazoo. And it’s no wonder - budgets do a whole lot of wonderful things for helping us know how to boss our dollars around! Sometimes, though, I talk about “the budget” as if it seldom, or never, changes, and that is simply not the case.
So we’ve talked about what a budget is and how to make one. You’ve set your goals, and you’re sticking to them! Between budgeting sessions, though, is the budgeting check-in. The purpose of a check-in is simple - account for the expenses you’ve had that day (or, for our pros, in the past week) and make sure you and your partner are on the same page.
Setting goals is at the heart of budgeting. Without well defined goals, Expenses increase and Savings decrease. So, let’s talk about how to set goals.
We are almost halfway through an arguably tumultuous year. With COVID-19 still uncontained in many areas and stay-home orders lifting rather slowly, life has certainly been unusual for the past several months.
While it is usually traditional to set goals at the beginning of the year (and I did, and my husband did, and we did together), I find a lot of value in quarterly evaluation of our annual goals. Even though we are a little early for our semiannual evaluation, I found myself pouring over them anyway.
So you have a beautiful dream built from your First Budgeting Session. You have ruthlessly cut out unneeded partitions from your budget and savagely decreased others. You, my friend, are on your way towards your dream!
That being said, you will probably get to your dream faster if you save more. It isn’t enough to just be “within” your means - not having negative balances or bounced checks to worry about. Achieving your dreams is going to take consistent effort to move towards them. We do that through Savings.
Whether you are a saver, a spender, or somewhere inbetween, whether you are flying solo or have a family to support, a budget helps you to answer hard questions. In order to have a budget though, you have to MAKE one. Since finances can be a touchy subject, here is a how-to guide for your first budgeting session - and bonus! The first part doesn’t even include money!
When my husband and I got married at the ripe age of 20 years old, we made plenty of mistakes. Ironically, one of them was not not having a budget - I religiously updated our (now somewhat-more-perfected) monthly budget almost daily as I tracked ingoing and outgoing expenses. To my intense frustration, my husband was just… not… getting it.
I spend most of my spare time playing with spreadsheets, my violin, or planting vegetables in my garden in hopes of bringing new insights into frugal living. Please enjoy, and don't forget to sign up for our monthly newsletter here.
Disclaimer - Mrs. FB is not a financial advisor. Nothing in these articles should be construed as investment or other professional advice, but rather personal opinion. Some links in these posts may be to affiliate sites - no products are advertised through this site that have not been personally used by the FB family unless expressly labeled.