Crunching numbers: personal budgets

  • Published
  • By Senior Airman Matthew Hubby
  • 436th Airlift Wing Public Affairs
DOVER AIR FORCE BASE, Del. --  In these economic times, many people - including Airmen - are finding it necessary to tighten their belts and budget accordingly. Personal budgets for an Airman or family all have one thing in common - they are a necessary part of a person's financial wellbeing.

Some people find personal budgets difficult to pin down; others find the constant number crunching to be a chore. With a bit of planning, flexibility and dedication, the stress of establishing a personal budget can be eliminated.

A budget consists of two items: income and expenses. When an income is greater than its expenses, it is a healthy budget. However, if expenses are greater than their income, a person or family is living beyond their means, which can lead to a multitude of financial issues.

"You can't budget in your head, you really need to write everything thing down. Writing things down helps you track where your money is going and helps you identify leaks in your spending," said Brigitte Gavas, training coordinator with the Dover Federal Credit Union. "The most common leaks are dining out and entertainment costs. By reducing the activity causing spending leaks, people are able to save more money in the long run, allowing them to be less stressed."

By establishing short, medium and long-term financial goals, people can establish what they want their money to do, said Gavas. The first step is to ensure all necessities are paid. Then a person should set aside 10 percent of their income - if they can afford it - to act as a fun fund.

"Even if you can't afford to put aside 10 percent of your income, set aside five - it's important to pay yourself as well as your creditors. Avoid impulse buys; the best way to do this is to ask yourself, 'Do I really need this?' then put the item down and walk away for 10 - 15 minutes and come back. You will often be surprised to find you really don't need the item, and it will stay on the shelf, saving you money," said Gavas.

By putting money aside, people are able to achieve their goals. Saving three-to-six month's worth of income is a good set-up for an emergency fund, which can help in the event of car repair or other emergencies.

"You budget for your short-term goals, save for your mid-term goals and invest in your long-term goals," said Gavas. "Your budget is a road map, or GPS, of your finances. It will forever be a work in progress, and always changing as things in your life change. It should be flexible and able to guide you where you want to go, even if you take the occasional detour."

However, these detours shouldn't become a habit, said Gavas. Sometimes it helps if people establish a "visualization board" (a board with photos and columns to track how far away they are from their goals). The board helps keep people focused on what they are saving for, and may make them less likely to splurge on the here-and-now.

"Say one of your goals was a vacation to the Bahamas. You would print out a picture of an island and post it on the board, along with a column to track how well you're saving. Any money you pull out of the account you were saving in you have to deduct from the column. It's a great way to track how well you are doing with your budget," said Gavas.

A personal budget will help people establish their financial status, as well as help them identify problem areas in their spending. Having a well planned budget can relieve stress and establish a sense of accomplishment.

"The 'I did this all by myself' feeling is great," said Gavas. "With the right budget, and the discipline and determination to stick it out, anyone can make that happen."