You Really Do Need a Budget

We’re taking a bit of a different turn in today’s podcast, entering the world of personal finance. Budgeting is the most important part of a strong financial foundation, and today we’ll discuss why that is, and why budgeting doesn’t have to be so scary. In fact, your budget can support you in your financial goals, instead of feeling restrictive and inflexible.

Show notes: https://www.possiblepromise.com/19

Topics Discussed

02:22 – Week in Review

• Index moves this week:
  • S&P 500: -5.6%
  • Dow: -6.5%
  • NASDAQ: -5.5%
  • VIX: +38.0%
• There are increased lockdowns in Europe and potentially in the US, creating higher volatility in the market this week.
• Additionally, stimulus talks have not been productive, and there may not be stimulus until the beginning of 2021.
• Index moves this month:
  • S&P 500: -2.8%
  • Dow: -4.6%
  • NASDAQ: -3.2%
  • VIX: +44.2%
• After rallying for 5 straight months, October is the second month of the market declining.
• Even though the market dropped this month, my own portfolio gained 9.4%.
• The power of options is that you can gain in any market: see last week’s podcast on the benefits of a delta-neutral portfolio.

08:22 – You Really Do Need a Budget

• Budgeting is the foundation of your financial situation.
• A budget does not need to be inflexible or restrictive.
• Keeping a budget does not mean that you can’t spend on nice things.
• A budget is essentially a priority list: it helps you to decide what is the most important in your life that you want to commit funds to.
• It forces you to be honest with yourself: if you want to add more money to one category, you have to take it from another.
• Scarcity is part of money: you only have so much money to go around, and you will probably always want more than your level of income will allow for.
• It allows you to save for periodic expenses which occur less than monthly. For instance, if you have a $600 bill every 6 months, you can set aside $100 every month and be ready when that bill comes along.
• Or, you can save for other goals, like setting aside money every month for travel, or Christmas gifts.
• It allows you to be prepared for what once were considered emergencies, such as car repairs, medical bills, the vet, etc. When these so-called emergencies come along, you’ll have the funds set aside to cover them.
• No matter how little or how much you earn, everyone can benefit from having a budget.
• Let me help you to overhaul your budget: just sign up for my new Budget Overhaul package

Resources Mentioned

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