By Professor Anthony Rivieccio MBA PFA
I currently host a financial television show on the internet called Financial Focus University ( you can find on the NY Parrot YouTube & Facebook channels). We have started a ” 4 week discussion” on Budgeting: What is it? Why do you need it? What is the purpose? Is it just for individuals? Families? Businesses?
Budgeting, is for everyone!
Last week, Part 1, we talked about what budgeting is— and is not– and to clear up some misunderstandings before we go any further :
Would you drive your car without your glasses?
Would you go to the supermarket without a list?
Would you go on vacation without looking at your budget first?
Yes, Budgeting is a roadmap- not for the present- but to be used as a roadmap- for the future.
Lesson 1- Budgeting is NOT about the present- it is about the future.
So , Part 2, we will talk about making your specialized budget cake, and understanding the right ingredients for your special budget cake.
Now this is where you want to pay extra attention and grab a pad & pen
1- Net Income- Correct , Net Income. Your Gross means nothing. You spend your Net Money every day, so that’s what we count as Income
2-Fixed Expenses- what you pay every month that you don’t have to think twice about. The Rent, Telephone Bill, internet access, Transportation, things you know you pay every day, week or month
3- Varible Expenses- These are the things you do not HAVE to pay every month. Christmas is once a year right? So are the holidays? Maybe Emergencies? Maybe School?
4- Catorogize Expenses- Needs vs Wants
This is where you have to be honest with yourself. You are not ( at this point) trying to justify any price or number, what you are justifying, with EVERY expense, is whether it is a NEED or a WANT.
The Rent is a NEED. Food is a NEED. Eating at a Diner ( especially if you have food at home) is a WANT !.
So, grab your paper and pen and count your income such as:
After putting down your Income then put down your Expenses. Make sure as you write down your Expenses, to catororize them as a NEED or a WANT.
And, for example, to show you MY monthly budget:
And what you see is my Monthly NET Income ($2,500) subtracted by my expenses, and catorized by need and want.
To drill a bit you can see that out of my total expenses ( $2,403) that $1,873 of it ( or 78%) is used for NEEDS. That means my budget has 22% of WANTS. While I do show a monthly Savings of $97 , this represents only 4% of savings
Remember those Catorogizations. They will now become more important.
So, I am saving $97 a month. That’s a good start.
But budgeting is for my short & long term goals. Goal 1 ! Short Term . Trip to Florida in 6 months. I need more money?
How to I do it? By proper budgeting.
And on Part 3, next week, we will discuss different kind of budgeting strategies that will save you ( or me) even more money. Then later , Part 4, we will look a bit closer at our budget and see if we want to ” tweak” it for more income related opportunities or look closer at our needs vs wants, in proportion to our next lesson, Part 3, ” Proper Budgeting”
Looking at mine, see you next week! We both have a lot to fine tune 😳.
( If you would like copies of slides for Part 1 & Part 2 please feel free to email below. If you would like to watch Part 1 or 2 on Financial Focus University, every Friday Live at 5 PM, just go to the media NY Parrot Facebook & YouTube internet channels below).
Professor Anthony Rivieccio, MBA PFA, is the founder of The Financial Advisors Group, celebrating its 25th year as a full service investment planning & management firm . Anthony is also owner of Rivieccio Financial Advisors, a virtual only financial planning & advisory firm, opened in 2021.
Mr. Rivieccio pens a financial article called “Money Talk” along with ” Financial Focus”. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The New York Parrot, The Bronx News, thisisthebronX.info , The Bronx Chronicle & The Parkchester Times.
Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University.
Financial Focus University TV can be seen every Friday , Live 5PM, on The NY Parrot Facebook & YouTube page channels .
Ask The Professor is your new Personal Finance Do It Yourself community found in Facebook Groups.