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By DoughMain Financial Literacy Foundation Stated simply, a budget is a plan reflecting your income and expenses. Many people ask the question “Where does all the money go?” or “How am I ever going to afford….?” A budget will enable you to answer the “Where” question, and help you answer the “How”. Once you understand how your money flows, you gain an element of control over your financial life. Budgeting often points out specific areas where you have more flexibility and control over spending than you may have assumed. This understanding makes it possible to make more informed decisions regarding your saving and spending priorities. It also makes it more likely you will attain your financial goals. This article explains how to budget and reap its benefits. Understanding Your Money Income is money you receive. Most people receive income on a bi-weekly or monthly basis. If your income is stable - such as a regular salary or other payment - then budgeting for income is relatively easy. If it fluctuates - for example, if you receive your income in the form of commissions or periodic bonuses, then it is a little more complicated. In those cases, you need to assess how predictable your income is. Rather than guess, you can track it historically and use an average to project what you can expect in the future. Be careful, though. If you had a particularly good year, or received an unusually large bonus, then don’t assume you will do as well going forward. Similarly, if you earn a salary, it is best not to assume you will receive raises. Once you have a good idea of your income, you can track how your actual income compares going forward, and make adjustments up or down as your situation warrants. Expenses represent money you spend. Some of your expenses will be relatively unchanged each month. These include items such as your rent, student loan or auto loan payments. Most will be variable, however. Utilities will change depending on how much electricity, heat or air conditioning you use. Others such as food, clothing, and entertainment will also change. The best way to get a handle on where your money is going is to track it by category for a number of months, and then use that information as a basis for your monthly budget. You can use the average, but pay attention to unusually high or low months. The chart below is an example budget worksheet from FiKit, but you can and should use categories that meet your needs. Websites such as nerdwallet.com and moneyunder30.com provide additional examples, and there are several Google Sheets or Microsoft Excel templates available for free. While tracking your income and expenses may seem boring, the good news is that there are also several apps that make it easy. These apps track and categorize your income and spending for you. Your bank may already provide financial planning tools as part of their online services. Look for a tab that says “tools” or “financial planning” or “my financial picture.” Other services, such as mint.com, are also popular.
Using a Budget to Set and Attain Financial Goals As you review your income and expenses, evaluate where your money goes. Many people are surprised at how much money is spent on small, incidental things like coffee or dinner out with friends. Others identify various “hits,” such as unanticipated auto repairs or dental or medical bills that set them back more significantly than they realized. As you go through the exercise of evaluating your expenses, you will likely find areas where you want to make changes to your spending habits. In fact, one of the great benefits of budgeting is it enables you to understand these habits. You will no longer need to “guess” how much you spend. Budgeting usually points out areas where you have more flexibility and control over your spending than you otherwise realized. Once you have a picture of your historical income and expenses, the next step is to set financial goals. Goals can be anything, from planning for a vacation to saving for a car, house, or retirement. Your financial goals should reflect your personal values and interests. No two people will always have the same goals. You can have more than one goal. For example, establishing an “emergency fund” to cover three to six months of expenses is a good short term goal. Money for retirement is an example of a long term goal. If you are having financial difficulties, resolving them can also be a goal by exploring expense reductions to a level that can be covered by your income, or paying off credit card debt within so many months. While your budget is a tool that will help you attain your financial goals, when setting goals you want to be sure they are SMART Goals.(1) SMART goals are always specific, measurable, attainable, realistic, and time-dependent. Keep the following chart in mind as you think about your goals.
George T Doran, “There’s a S.M.A.R.T. way to write management goals and Objectives.” 1981 Once you understand your income and expenses, and have established goals, you can then build a budget to meet them. Remember, too, you can have more than one goal. Let’s suppose you have the goal of establishing an emergency fund of $6000 within one year. In that case, you need a budget that will enable you to save $500 per month. If your current income exceeds expenses by at least that amount each month then congratulations, you are well on your way to meeting your goal. If not, then it is time to review your expenses to see where you can economize. A good place to start is by reviewing what you spend on entertainment, clothing, and groceries. Are you buying more shoes than you need? Do you go out to lunch everyday or would it be wiser to bring your lunch to work? Do you buy a lot of “junk food” at the grocery store? You can also explore ways to earn more money, such as a second, part time job on weekends. The important point is having and tracking your budget information enables you to make informed decisions, based on the facts of your situation.
Get into the habit of comparing your actual spending to your budget each month, and adjust it as circumstances change. Your budget provides a foundation for you to understand and better manage your financial health. Tracking progress against your budget is a discipline that helps you maintain it. It makes it more likely you will reach your financial goals.
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While many people view owning a business as the American dream, they often gloss over the
trials and tribulations that accompany it. In addition, it’s often even more difficult for minority- owned businesses to expand their reach and grow. Having access to an influential network and resources is key to creating a business that thrives. Resources for support can be an instrumental way of helping people get their businesses off the ground and even expand them. Here are a few ways to help create more awareness around your minority-owned businesses and get it off the ground. Narrow Your Focus While this may seem like a counterintuitive place to start when growing your business, it’s important to understand your niche or expertise. One of the most common points of failure is trying to do too much, and instead focusing on your core strengths. Stretching yourself too thin can lead to a lower quality product and potentially losing the core identity of your business. A good example of this is General Electric (GE), and how according to a Yale financial expert “they got way beyond themselves” by trying to be in too many spaces at once. GE went on to rectify this by cutting many aspects of their business and splitting into three main parts, GE HealthCare, GE Aerospace and GE Vernova. They trimmed some of their fat, and are now able to develop each division with purpose. Focus on what makes your business unique, and put it at the forefront of your development. That doesn’t mean you have to make that your only offering for the rest of time, but it’s important to have a solid base before branching out. In doing this, not only will you get more comfortable with your business, but you will also take more time to focus on the specific aspect you want to expand. Oftentimes, underrepresented owners have the most unique facets in their businesses, and it’s important to highlight those and allow your distinctive offerings to shine. Look Into Mentoring Reaching out to someone who’s grown a business themselves or has firsthand experience can greatly expedite your success. Instead of learning through trial and error, you can use the knowledge of a seasoned veteran and have a more stable starting point. There are a lot of small business programs available, one being Put Me On, which is a Small Business Accelerator program from Gopuff. In addition to putting a product in their store, the program offers networking events, monthly workshops, and 1:1 capacity-building sessions. This program is geared specifically for underrepresented entrepreneurs and aims to give them the knowledge and experience they need to succeed. Regardless of if you decided to use a program or an individual, mentoring is very important even in a non-official capacity. Having someone with knowledge and connections can help you avoid common pitfalls and open doors to opportunities you might otherwise miss. Consider Special Funding Options Obtaining capital is one of the most common roadblocks that aspiring business owners face, but luckily for minority-owned businesses, there are opportunities available. One of these options is grants. Grants are different from loans in the sense that you don’t have to pay them back; they are essentially gifts given to those that meet certain criteria. There are many different small business grants for minorities and it’s crucial to the success of underrepresented entrepreneurs that they exist and are taken advantage of. The monetary sum of these grants vary based on program and need, and exist for all sizes of companies. According to a study co-authored by Duke University, Black entrepreneurs are three times less likely to apply for a line of credit due to fear of rejection. Ensuring that minority-owned businesses have the opportunity to grow and thrive is a key element to not only our economy, but to ensuring that everyone has the opportunity to create something that they can call their own. In addition to grants, there are also loans, crowdfunding, and more flexible lines of credit that are available specifically for underrepresented entrepreneurs. Take the time to examine multiple different types of cash flow, and determine which is the best fit for your business at its current stage. Network With Other Underrerprested Entrepreneurs In a similar vein to getting advice from someone with previous experience and knowledge, having a support network around you is also very important in the growth of your business. There are many minority networking options; a lot of local communities have very passionate bases, and there are also larger networks such as The Minority Business Network. Networking opportunities like this not only help connect you with like-minded underrepresented entrepreneurs but also give your brand a platform. Through networking, you can exchange advice and thoughts with similar parties and help develop a more well-rounded business as well as an understanding of the other underrepresented entrepreneurs. Starting a business can seem at times like a leap of faith, especially as an underrepresented entrepreneur. The latest Census data shows that only 18.7% of businesses are minority-owned. While this number is growing, it’s important to know that you have resources that you can rely on. Creating a company doesn’t happen overnight; use what you have, lean on mentors and those who have experience, and use the tools that are provided. Everyone deserves to share their vision with the world, and underrepresented entrepreneurs can showcase that through their businesses.  Are you thinking about making the leap to a new career? You’re not alone! According to recent research, a staggering 73% of women want to change careers. Some of the main reasons women want to make a career change include the need for higher pay, the desire to find a more fulfilling career, and escaping burnout. Whatever your reasons, switching careers can be a boon for your mental and physical well-being!
Financial concerns are a common obstacle among women seeking a career change. Changing jobs comes with many hidden expenses and considerations, including changes to health insurance coverage, retirement benefits, and cost of living. You may also have to plan for moving costs and the financial burden that comes with temporary unemployment. Below, DoughMain Financial Literacy Foundation shares some key financial tips to consider during your career change. Use Free Online Resources for Resume Building Refreshing your resume is essential if you want to land a career in a new industry. Instead of hiring someone to help you write a resume, take advantage of free online resume generators. This tool gets the job done in minutes! Just choose a professionally-designed template and add your own copy, colors, images, and photos. Taking advantage of free resume templates is a great way to make your resume pop without adding extra costs to your career change. Create a Monthly Budget Don’t let your career change derail your financial goals. Budgeting will help you stick to your financial plans during transitional periods like this. Review your spending habits over the past few months to determine your average monthly spending. Then, break down your expenses into needs and wants. Consider cutting some of your wants from your budget until you’re settled in a new, stable career. Remember to also account for any new expenses that may come with your career change, such as the cost of buying a new wardrobe or extra commuting costs. Factor these into your budget going forward to ensure your finances can handle this career change. Build an Emergency Fund Before quitting your job, funnel some money into an emergency fund. An emergency fund is meant to cover unexpected expenses and downtime between careers. If it winds up taking longer than you anticipated to land your next job, your emergency fund will ensure your basic needs are covered. If you’re living on your own or you’re the sole earner in your family, try to set aside at least 6 months of living expenses in your emergency savings. Make the Most of Your Benefits Taking advantage of your employee benefits is another thing to do before leaving your job. Make the most of any benefits available to you, including health services, tuition reimbursement, and flexible spending accounts. Make note of the benefits you regularly use, so you know what to look for in your next position. You’ll also need to make a plan to roll over your 401k to your new employer. Plan for Relocation Expenses If you’ll be moving for your new job, plan how you’re going to cover your relocation costs. According to Moving.com, the average cost of an interstate move was about $4,890 back in 2019, and you can expect that price to be higher today. Will your new job cover these relocation expenses? If not, are you prepared for this cost? You’ll also need to consider the potential change in your cost of living. Landing a higher-paying job might not be worth it if you’re moving to a city with a higher cost of living. Take advantage of online cost-of-living calculators to estimate your future household spending. Doing your research will ensure moving for a new job is both financially and emotionally worthwhile! If you’re a woman stuck in a career you no longer like, start taking steps to find something more fulfilling. Evaluate your household spending, create a new budget, and research anticipated relocation costs. And remember to take advantage of free online resume makers before embarking on your job hunt. Good planning will ensure your career change goes as smoothly as possible. Are you looking to enhance your financial literacy? Check out DoughMain Financial Literacy Foundation for a variety of personal finance programs! |
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