This content is provided to Johns Hopkins employees through a partnership with Marsh McLennan Agency, or MMA.
If you've never created a budget, the task can seem daunting, especially if you're trying to dig yourself out of debt or to become financially stable. Ironically, when you're just starting out or digging yourself out of debt are two times when budgeting is most critical.
Why should I budget?
Even if you aren't currently facing money problems, just one bad day or unexpected expense (like a car repair or medical bill) can start you scrambling to pull together funds. With budgeting, you can have a safer financial future.
What is budgeting, and how do I start?
Knowing what a budget is and understanding how to budget are different.
A typical definition for budgeting is something like "creating a spending plan for your money." Not only is this definition vague, but it offers little insight into how you should begin creating your own budgeting plan.
The first thing to add to this definition is words to describe your budgeting plan, such as measurable, actionable, and realistic.
- Measurable is easy to understand. You can see how much you planned to save and how much you actually did. But some budgeters forget to include the element of time: How much do you plan to have saved after X months?
- Actionable is where a lot of so-called budgeting plans fall apart. You may write down your expenses and calculate how much disposable income you have, which then allows you to determine how long it will take you to afford X. But this is more of a wish list than a budgeting plan. Actionable means having specific tactics or actions that will further your goals and saving efforts.
- Realistic is also an important word to include because it reins in your spending aspirations. An Italian sports car or a beach house in Cabo might not be possible with your current income. Also, "realistic" includes the element of time. You can't save for a cruise vacation overnight. You have to give yourself a reasonable amount of time to see your plan through.
By including these criteria in every budget plan you make, you'll have a much higher chance of successfully following through.
To get you going
There is never a bad time to begin budgeting and putting away money for your future. But without creating a plan, it is difficult to accurately understand how you spend your money and identify potential saving opportunities. When you do have this information, you can begin formulating actionable strategies to cut spending and put more into your savings. To learn more, click here.
In addition to articles such as this one, JHU partner Marsh McLennan Agency, or MMA, has an extensive catalog of budgeting resources that includes courses, tools, articles, and free consultations. Start here:
Use a budgeting tool, a real-time, interactive budgeting tool with expense analysis.
Schedule a free consultation with an MMA financial coach for help with budgeting, managing debt, creating emergency savings goals, or other financial issues.
Sign up for your free MMA Prosper Wise account to learn all the online resource has to offer
Upcoming webinar: MMA Overview
Learn about JHU's financial education and consultation services through MMA's Prosper Wise. Jennifer Conklyn and Jay Fisher will provide a demonstration of the website from noon to 1 p.m. on Thursday, March 23. You will learn how to:
- Create your Prosper Wise account
- Complete your Financial Wellness Assessment to build a personalized action plan
- Explore courses, calculators, articles, videos, and webinars to make understanding where you are, and where you want to be, easy and approachable
- Schedule appointments with MMA's financial coaches, who can answer questions about retirement, debt and budgeting, college savings, investments, and more
- Explore the Money Mindfulness hub
- Track your financial stress score monthly
Register in advance for this webinar here.