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<p class="wp-block-paragraph">It is Christmas day 2021, and as the day comes to an end, I start to prepare my finance for 2022. My budget is one of the essential tools that I work on each year and review, monitor, and update monthly. Every dollar that I make must have a job while also allowing some wiggle room to splurge and invest when the opportunity arises.</p>
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<p class="wp-block-paragraph">It is crucial to have a budget for anyone just starting out on their financial journey. It does not have to be detailed; it can be high level with the basic:</p>



<ul class="wp-block-list"><li><strong>Income</strong><ul><li>I consider this as the amount of money that you receive each month either from your employment, investments, Social Security, or other sources of income. Often, I find that some people don&#8217;t understand how much money they earn. A few have an idea of their hourly rate, the amount they receive on their paycheck, but at the end of the month, they cannot tell you to the penny the amount of money they&#8217;ve earned that month. I always find it interesting when people are shocked by the amount, they&#8217;ve made that year when they fill out their taxes.</li></ul></li></ul>



<ul class="wp-block-list"><li><strong>Essential expenses: Mortgage/rent, food &; utilities</strong><ul><li>I place the mortgage/rent, food, and utilities as essential expenses because I will make sure I have a roof over my head and food to eat at the end of the day. Once those are taken care of, I will ensure that I have utilities (heat, water, electricity) in place. I will discuss the pros and cons of renting versus home ownership in a future blog. But it all comes down to what works best for your budget, financial goal, and lifestyle.</li></ul></li></ul>



<ul class="wp-block-list"><li><strong>Secondary expenses: phone &; internet, home/renter/car insurance, transportation</strong><ul><li>I consider my phone, internet, insurance, and transportation secondary expenses. The way I see it, if worse comes to worst, I can get a &#8220;pay as you go&#8221; flip phone with limited internet access. There are various ways to connect to the internet, such as coffee shops, libraries, and public places. It is not as convenient as having your own, but you could get access to it from other sources if needed.</li></ul><ul><li>Home/renter and car insurance are good tools to have. <a href="https://portal.ct.gov/CID/General-Consumer-Information/Automobile-Coverage-Information">Connecticut requires a minimum of $25,000 per person and $50,000 per accident for bodily injury liability and $25,000 per accident for property damage liability</a>, but encourages drivers to have more. Other states may have different requirements. However, suppose you live in an area with great public transportation. In that case, you might not even need a car, so that&#8217;s probably an expense you don&#8217;t have to add to your budget. But you might still need to have a transportation budget to pay for subways and buses rides. If you have a car, you might have to include the cost of purchasing gas, car payments (if any), car maintenance, etc. A few people add their car insurance as part of their transportation costs. As for home/renter insurance, I am not aware of a state requirement. Still, as a homeowner or renter, if you can afford to purchase this insurance, I would say go for it. It can protect your personal property, protects you against liability for accidents for an injury that occurs on your property, and other types of protection. As a consumer of these insurances, it is always essential to shop around every year to find out if there&#8217;s a better deal out there that you can further explore.</li></ul></li></ul>



<ul class="wp-block-list"><li><strong>Debt repayments</strong><ul><li>Debt can be student loans, credits cards, medical expenses, and other forms of debt. Personally, my most considerable debt after my mortgage is my student loans. It is my biggest stressor and the least of my worries. If I were to fall under hard times, I can either get an administrative forbearance or a deferment for a few months.</li></ul></li></ul>



<ul class="wp-block-list"><li><strong>Splurges: Netflix/Amazon Prime, cable, gym memberships, etc.</strong><ul><li>I consider streaming networks, TV cables, and fitness center memberships as wants versus need items. I wish the cable companies would allow people to pick the channels they want and only pay for them, but no, everything comes with a bundle. Gym membership should be obsolete unless a personal trainer or coach is part of the package at no extra cost. I remember paying monthly gym memberships, and I would visit that gym once or thrice that month to walk on a treadmill when I could have taken a walk and gotten some fresh air. So, we won&#8217;t dwell on these splurges. I have <a href="https://amzn.to/3mzXOk2">Amazon Prime</a> and TV cable (discount package with internet and home phone). I think Amazon Prime is worth it. I get access to free shipping, music, magazines, movies, and other things I probably don&#8217;t even use. At least, that&#8217;s what I tell myself when my annual bill is due.</li></ul></li></ul>



<ul class="wp-block-list"><li><strong>Savings</strong><ul><li>I should have added saving after the essential expenses. Still, it depends on your financial need and how you set up your account. One of the best pieces of advice I have heard and received is to &#8220;pay yourself first.&#8221; It could be putting money away in retirement or saving accounts.</li></ul></li></ul>



<ul class="wp-block-list"><li><strong>Tithing</strong><ul><li>As a Christian, giving to my church and community is very important to me. It is a privilege to share 10 percent or more of what I earn to organizations preaching the gospel, working to help the poor, and to families/friends in need.</li></ul></li></ul>



<p class="wp-block-paragraph">In future blogs, I will share some of the other tools I learned and apply to my financial well-being. But, in the meantime, I leave you all with these financial tools to assist in your journey. Comment below if you would like to request a copy of my budget template.</p>



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