Our Congressional representatives seem to lose any budgeting skills they possessed (I’m giving them the benefit of doubt here) as soon as the final ballots have been counted. Our Congress has allowed the Fiscal Cliff and the resulting Sequester to occur because they don’t seem able to create a balanced budget.
Unfortunately, the general public is once again left holding the bag. As these much talked about cuts are actually put in place, many will lose their jobs or have their paychecks cut back. If you have even the slightest inclination that your job or paycheck will be affected by the Fiscal Cliff and resulting Sequester you need to act now.
The best way to approach any type of financial crisis is to have a budget that has been working. Unfortunately, many people don’t even have a budget, in fact, they really don’t know how much money they spend each month!
If you don’t have a budget, what are you going to do? It’s time to start right now—not tomorrow, but right now. Even if you believe that the effects will only last a couple of months, you should cut back spending immediately. To get started, record every penny that you spend for at least the next sixty days. As you begin to record your spending, start to create meaningful categories that apply to your spending. At the end of the first thirty days, categorize your total spending.
One of the biggest mistakes people make is with their lifestyle. When things get tough and money is tight, they believe that it’s only temporary and in a few weeks everything will be back to normal. As a result, they don’t change their lifestyle. Unfortunately, “temporary” usually lasts a lot longer than we expect and many people get into trouble by using credit cards to subsidize their lifestyle. About 50 percent of Americans carry a balance on their credit cards—they are spending more than they earn
At the end of the first 60 days you should have a pretty good idea of how much you spend in each category. The most obvious thing to do next is to make sure that your spending is less than your income. If the total of your expense categories are greater than your income, you must take a hard look at your spending and cut it back so that it is equal to or less than your income.
It won’t be fun to cut back and scrimp but staying out of debt will be a blessing as you move forward. Remember the Bible tells us in Proverbs that the “borrower is slave to the lender”. Don’t let the idiocy in Washington drive you to be a slave!
Will the Federal budget crisis, the Fiscal Cliff, or the Sequester affect your life? I hope not. But if it does, be prepared. Make sure that you have a good strong budget and then make sure that you have established a “crisis budget” so that you will be prepared for any financial event.
If you aren’t sure how to create a budget and would like to know more about what God says in the Bible about handling money and possessions, take a Compass Catholic nine-week Bible study, Navigating Your Finances God’s Way.
Watch for our next blog on the “B” Word!!