Your Personal Budget Plan

Credit: Markus Spiske

If you’re wondering, the answer is yeah — you should definitely have one. Here’s a quick cheat sheet on the correct order of payments, a hierarchy of personal needs to financially take care of, if you will, every month.

  1. Pay down your fixed expenses to LIVE— we’re referring to rent, mortgage, car payments, utilities, and food (not going out food, but groceries).
  2. Pay down your DEBT— come up with a plan of how much you want to sock away every month at your remaining balances so that the number shrinks to the size of a raisin. The point is to do it every month, rain or shine. Consider lowering any high interest debt payments you owe to a 0% interest rate offer through a balance transfer. Check out for more info — it’s a good site for sifting through your options.
  3. Boost your EMERGENCY fund — do this any way you can. Shit happens to all of us like losing a job, or getting sick, and you need to be able to take care of yourself for a period of time without regular income. Open an account and consider it untouchable for anything other than big-time S.O.S. financial emergencies. What’s the amount you should accumulate and set aside? Add up 6 months of your essential living expenses, and that total number is your minimum. Don’t even think about touching this money to throw your best friend a surprise birthday party. The emergency fund is your personal bailout. You need to put on your mask first before assisting others.
  4. INVEST in yourself — consider taking a class that would boost your skills, or earning a specialized degree toward a career that would make you happy. The goal is raise your probability of a higher income stream in the future. You’re investing in your productivity.
  5. Pay for the EXPERIENCES that make you a happier, wiser person — travel. Become more empathetic about the riches you take for granted. Become richer on the inside because it does show on the outside.
  6. BUY the stuff you want — get a haircut, great shoes on sale, the latest iPhone. If you’ve done the stuff above, you’ll be able to afford it.

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