Hello! and welcome to Everyday Finance and Economics with the Siglers! The podcast where we discuss what you need to know about personal finance and economics and give you practical advice on how to get started and be smart with your money.
This episode is a continuation of our discussion about budgeting. Last time we went through the mechanics, and this episode we're diving straight into the motivational factors behind budgeting. Why it's so important, what a budget could do for you, and even when budgeting is necessary. If you have any questions please feel free to contact us! (information down below) and join us next week for our first look at investing!
Come engage with us!
Instagram: @efespodcast
Email: efespodcast@gmail.com
Website: http://efespodcast.buzzsprout.com
Intro music:
Coffee & Lullabies R&B mix by J.Lang (c) copyright 2020 Licensed under a Creative Commons Attribution Noncommercial (3.0) license. http://dig.ccmixter.org/files/djlang59/62099 Ft: CrazyLittleAsian aka SHA
Coverart by Karina Ng @karina.ng on instagram
Hello! and welcome to Everyday Finance and Economics with the Siglers! The podcast where we discuss what you need to know about personal finance and economics and give you practical advice on how to get started and be smart with your money.
This episode is a continuation of our discussion about budgeting. Last time we went through the mechanics, and this episode we're diving straight into the motivational factors behind budgeting. Why it's so important, what a budget could do for you, and even when budgeting is necessary. If you have any questions please feel free to contact us! (information down below) and join us next week for our first look at investing!
Come engage with us!
Instagram: @efespodcast
Email: efespodcast@gmail.com
Website: http://efespodcast.buzzsprout.com
Intro music:
Coffee & Lullabies R&B mix by J.Lang (c) copyright 2020 Licensed under a Creative Commons Attribution Noncommercial (3.0) license. http://dig.ccmixter.org/files/djlang59/62099 Ft: CrazyLittleAsian aka SHA
Coverart by Karina Ng @karina.ng on instagram
Hello, and welcome to everyday finance and economics with the Sigler's the podcast where we discuss what you need to know about personal finance and economics, and give you practical advice on how to get started and be smart with your money.
Speaker 2:We are your host Glenn and Christina Sigler's. So Christina, what's going on in the economy this week.
Speaker 1:So here's what matters this week in the United States, as of April 9th, the white house supports that 112 million Americans, which is about a third of the population have received at least one dose of the COVID-19 vaccine. And around 60 million are fully vaccinated. That is fantastic news as the new and more deadly British COVID variant referred to as[inaudible] has now become the predominant variant in the United States. Vaccination should be opening up to the general adult public this week. So please be sure to sign up as soon as possible around the world. An estimated 2% of the entire global population has been fully vaccinated with that. The economy, as we all know, has taken a hit during the pandemic, but the good news, according to Jerome Powell, who is basically the U S economy is number one protector as chairman of the federal reserve is that the economy is in a position where growth and job creation should be relatively easy as more and more people become vaccinated. So that leads into our economic term of the episode. It is economic growth actually, which is an increase in the amount of goods and services produced within a population over a period of time. You might've heard of the term GDP, which stands for gross domestic product, which is how economists typically measure economic growth by tracking how much the economy makes over a given period of time. This episode is a continuation of our budget conversation. So without further ado on the part two, Oh, what if I don't want to budget? It seems hard. And I want to spend the money that I want to at the time that I want to. So what if I don't want to do that?
Speaker 2:So look, you don't have to budget. People have been not budgeting for quite some time and they've been fine. Yeah. Right. Study shows that some folks just have a built-in capacity to understand when they're going to, um, run out of money and your grandmother didn't do a whole budgeting, but she knew where every dollar she knew wherever you can catch her off guard now. But you know, there's some people that are like that. They have that capacity to never overspend and know where they are. But if you find yourself struggling periodically or can't see how you can even think to re re reach your mid or long-term financial goals, right. This is something you might want to try.
Speaker 1:And there also might be like seasons of your life, where you budget. Like if you're saving it for a house and then you don't do it anymore after you buy the house, you know?
Speaker 2:Yeah, absolutely. And so go ahead,
Speaker 1:Leaning off of that. Why would I want to budget?
Speaker 2:Well, look, the budget helps you to, to decide what you must spend your money on and what you versus what you would like to spend your money on. And that's really a, um, uh, a critical issue between understanding that. And then just having a good idea at virtually at any moment where you're spending your money to find out if you have any leaks leaks in your budget, that money is just flying out. And this is what, this is what grandma used to tell me. It's like money just slipped through your fingers. You can't let that happen because that's wasted opportunity.
Speaker 1:Did you have subscription services that you forgot you signed up for? You signed up for the free trial and forgot to cancel, right? Not that that's ever happened to me.
Speaker 2:And so it also gives you the opportunity to find out if you can spend money, less money in certain categories, Hey, I spend$300 a month on X, whatever X is. Can I find a way to spend 200 or 150 and still be okay? I might not have to have the$50 socks every week I could get. Yes, there are$50. I might be able to get away with some less expensive socks. When I had my sock urgency.
Speaker 1:That's the part where you really have to be real with yourself. As I said before, it'd be like, all right, what, what do I really need to be doing here? Yeah. Um, okay. So why should I try to save money? That also sounds hard.
Speaker 2:Um, so there things that you want to do with your life, and you're going to need often, you're going to need some money to help you do that. Whether it's buy a house, buy a car, go on a trip, um, get, uh, get an advanced degree. Um, those things often costs money and you're essentially using your ability to, um, to have financial discipline, to help you get there. Uh, and also you might need money for an emergency. So, you know what happens if some, somebody got sick and you had to fly home, but they had the money to fly home. Oh, what if you got sick? What if you got sick? What happens is cost money? What happens if your car breaks down and guess what? Life happens? People get sick cars break down. Um, you need new appliances. Those things happen. And so having some, having saved some funds allows you to absorb the bumps in life without putting the rest of your life in a tailspin.
Speaker 1:And that all sounds well and good. But what if I feel like I don't have enough money to save?
Speaker 2:So, you know, that's the other thing about, about it. Look, when you have, when your income is lower, that's when you need more financial discipline and then looking at this objectively over longer term, say, Hey, look, I, you know, I, you know, I'm not making enough money. You'll figure that out. After looking at your budget and looking at how, how you spend your money saying, look, I'm, I'm just not making enough money. And then that may force you into some other life decisions. Okay. Do I need to try to get a promotion? Do I need to have a side gig? How else can I make more money? Do I need to go out and get another degree or change my profession? Because you know, this profession, isn't doing it for me. And now I'm not saying any of those things are easy, but understanding your financial position in the job that you're in, helps you figure out some of those things.
Speaker 1:So how do you start? And most importantly, stay on top of a budget. Cause I feel like planning anything is easy, but how do you keep the motivation to keep doing it?
Speaker 2:Well again, so for me, it's, I always want to stay on top of what my current financial positions, um, you know, how am I staying on track, but it's really about the, the mid and long-term goals. Like I I'm, I'm typically not worried about, Hey, will I have enough money to make it this week? I already know that I already know I'm going to pay my bills this week, this month. Um, I'm confident enough in, in, in what I've done financially to do that, but it's really about am I, am I meeting my objectives for my midterm goals? And I'm talking about one to two year goals and my long-term goals. And so if, if those are things that I really want, then I am going to, you know, use all the tools that I can to make sure that I am prepared to go do that when it's time. And so you just can't, you know, if you don't prepare for it, it's never gonna happen. And so this is really about you and your choices and how badly you want it to happen. Yeah. And so, you know, your own desire is your motivation.
Speaker 1:Okay. But say that you weren't in a situation in which you didn't know whether you were going to make rent or pay bills as much. Should you still have motivation? What is your motivation then to start a budget?
Speaker 2:How far, how far am I off? So if I don't budget, I don't know if I could be a little bit off or a lot off. Yeah. And if I'm, if I'm a little bit off, could I change a couple of things, a couple of minor things, right. And be on target,
Speaker 1:Like buying the store brand cereal.
Speaker 2:Yeah, absolutely. So, and you know, it's, you know, understanding, you know, budgeting again helps you understand your financial position, your financial conditions, and then the rest is about your behavior and choices. And so you need that budget to help you understand that so that you can make those choices and, and adjust. This is all about your choice and your ability to adjust. And so, again, it's, it's actually more critical when you're making a little bit of money, but I'm going to be honest. There are people making hundreds of thousands, hundreds of thousands of dollars a year that are just scrimping by because, because they can't control their spending habits where their bud or they, or they let their spending habits get out of control. So, you know, just because you make a, uh, a little bit of money doesn't mean that you can't, uh, you can't be prudent with your money and save and reach, reach your objectives. There are, there are dozens of stories out there about people, you know, never had a high paying job, but were able to save, save lots of money and, and do some great things with it. And so this really the, the budgeting part is, is, is, is a tool to help you with your own personal financial discipline.
Speaker 1:Okay. So how much money can I spend on food and necessities?
Speaker 2:So that's, uh, that's getting into the details of the, you know, some of those budget plans. And so you heard me say, Hey, there's a 50, 30, 20, you know, and there's variations of 50, 30, 20, um, 60, 20, 2050, but let's, let's take that 50, 30, 20. So half your pay, half of your take-home pay needs to go on necessities. So are you going to say, um, is it, if you make a thousand dollars or$2,000 a month, that means you can spend a thousand dollars on rent food. Let's define food
Speaker 1:Though. Cause like going out to eat, is that a necessity or is it
Speaker 2:All right? So it, you know, typically up, well at a thousand, at$2,000 a month, more of it should be groceries. And so, um, and it depends on, you know, are you trying to feed one or are you trying to feed two? And you know, you'll, you'll have to, you know, that's why I have you track how much you spend, so you can see what that looks like. Um, you know, there are some, uh, um, articles out there that, you know, break down the 50, 30, 20 into a lot more detail and say, okay, at this income level, most people are spending, you know, five. So out of that fee, uh, you know, out of your, out of your total salary, you might be spending five or 6% on food and that's going to include, uh, food away from home. Okay. Now, again, as, as you heard me say, you might be, you might say, ah, you know, I've got, you know, a$2,000 budget, a thousand is going to go to rent and gas and, uh, electricity and a hundred dollars, 150$200 a month. It's going to two groceries. I'm going to take some of my wants money, the, you know, three, four, five,$600. And I'm going to say, one of the things I want to do is I want to eat out once or twice a month and you carved that out.
Speaker 1:Yeah. Okay. Okay. All right. Um, how much of a budget should be invested
Speaker 2:When you're starting out? I'm just going to say as much as you can. Um, the 50, 30, 20 rule says, Hey, you're, you're shooting for 20% when you're starting out, you might not be able to save 20%. You might live in a higher cost of living area. And that 20% gets down to five or 10%, if that's what you can do, that's what you can do. Um, and so, you know, your, your rent might be in like in certain places in New York, in California, right. Might be 50% of your take-home pay. Um, and, and that's the reality of where, where you live. And so you're going to have to look for alternatives. Uh, you know, my, I have roommates and when you're in those situations, because you're spending so much of your money on rent, you might not be able to save a lot, but just because that's where you start out, doesn't mean that's where you end up. Yeah. Because you're looking for your career to progress. You're going to get pay raises. You're gonna get pay raises over time. And as you increase, um, increase your salary and wages. What do you do? You increase, you increase your, say that now some people say, Hey, look, now I want a better place to live. Okay. That's true too. But then now this becomes a choice. How much do you want? How much more do you, uh, how much better place do you want? How much more do you want to be able to spend on your housing versus how much you want to save? Yeah. And, and then, you know, is part of your saving, saving for a down payment on a house versus increasing your rent. And again, that becomes a choice, very many choices. I think the first step in budgeting is really tracking what you spend first, understanding how much you make tracking, what you spend. And then going ahead with some information about, can I do a 50, 30, 20 budget is a 60 20, but you know what, what the percentages are after you see where you're spending your money and then cutting out the places where you can. All right. That's it for our show. Thank you so much for listening and be sure to join us again next time when we discuss investing.
Speaker 1:Yes. And if you have any questions for us, you can email us@efespodcastatgmail.com and follow our Instagram and Twitter, both at E F E S podcast. Thank you so much for listening. Take care, everybody.