John McMillin: Budgeting now gives more relief than couch cushion search

John McMillin • Updated May 2, 2017 at 6:00 PM

We receive a lot of phone calls at United Way of Wilson County and the Upper Cumberland, but by far the largest reason people call us is because they can no longer pay their bills. I can appreciate this; I’ve been through some tough times that included second and even third jobs to make sure I could pay my bills. Bad things definitely happen to us all but, in talking with most people that call us, I find that few folks have put themselves on a budget.

It’s a difficult to thing to think about when your world is falling down around you, but forcing yourself to keep your financial house in order will pay back with success. The good news is that it only takes about an hour, if that long, to set up a budget.

First, gather every financial statement you can put your hands on. Utility bills, bank statements and any information about your income or expenses should be compiled. You want to create a monthly average so more information is better.

Next, record all your sources of income. Are you self employed, or do you have outside sources of income? Should your income come by way of a regular paycheck, in which taxes are automatically deducted, then use your net income or what you take home.

Then you want to add all your monthly expenses. Write down everything and be realistic. Write down your mortgage, car payments, groceries, utilities, cable, school payments, auto insurance, literally everything upon which you spend money.

Divide all your expenses; one side will be for fixed expenses, those things that stay relatively the same every month and are required and one side will be variable. Variable expenses are those things like groceries, fuel, gifts and so forth. I call this category the “pain” side, because these are things that can be cut or thinned.

Now you can total your monthly expenses and your monthly income. This is pretty simple stuff. If your end result shows you have more coming in than going out, give yourself a pat on the back. It means you can allocate more money to building an emergency account to pay for unexpected problems, pay off credit card bills or even building a retirement account. If you have less coming in that going out, you have to go to the “pain” category and begin cutting. It may mean you need a second job or put that skill you have to good use earning some extra change.

Finally, the budget should be reviewed monthly. The ideal situation is to know where every dime is going. Of course, there are dozens of sites on the internet, which you can research to help you set up a budget. This is simply an overview. It might be that you are great in setting up a budget, but you know someone who needs some help. There are few greater gifts than to help someone else get back on their feet by giving them some guidance through a tough time. I guarantee this method will yield far more success than any change you may find in the couch cushions.

John McMillin is president of United Way of Wilson County and the Upper Cumberland. Email him at [email protected]

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