“We must consult our means rather than our wishes.”
I grew up in a family that by today’s standard of living would be considered lower middle class or one step up from being poor. I experienced life with a stay-at-home mom and a blue color hard working father who did not make much money.
My mother was a great manager of their limited income. She did not have the Excel budget spread sheet that I have but I picked up a few tips on some of the categories that were important.
One of the categories was Tithing. Their tithing was basically in the form of service to family. They frequently invited them over to eat, especially a cousin with special needs whose mother and father were deceased. They also extended financial help to those less fortunate regardless of their own needs.
The second category was Saving. A small portion of their limited income was put aside for a rainy day. This seemed to be the thing that came naturally for people of that day because they had survived the depression.
Surprisingly Travel was a budget item even though it did not support luxury travel. We took a family vacation, but the cost was shared with extended family members. These vacations typically involved the rental of a camp on the water, so everyone could swim, fish and catch crabs.
Establishing an itemized budget was the first thing I did when we got married. It has remained a work in progress for fifty years. With that longevity I have evidence that it works. I have given my budget a title of “Prosperity Budget” which eliminates any connotation of limitations. It does allow me to be in control of my finances without debt.
I have offered many people guidance in living a life of abundance by having a budget. One young man that consulted with me before going to college followed my advice and established an itemized budget. He has always used this practice to create a life of abundance and establish a secure financial lifestyle and future. He told me a few months ago that he will retire in 10 years and will have accomplished his projected retirement savings.
I have been told by our grandchildren that the coffee drink they buy cost $5. When I drive by these coffee shops the lines are around the block. That tells me many people are spending at least $5 a day or averaging $100 a month on coffee. If that budgeted money were put into a mutual fund account averaging 8% interest, at the end of 30 years it would amount to a startling $143,000 in savings.
Since retirement we have personally taken two trips to Europe and several trips within the US. People have often commented on our ability to do that amount of traveling on a fixed income. I also tell them it is no great mystery. Travel is my passion and it is a budget item. We plan, save, and then enjoy our vacations!
As I stated before my parents had limited income. My father predeceased my mother. Ironically when my mother passed in 2005 we discovered envelopes taped on the back of the dresser in her bedroom with $7,000 in $100 bills. Some bills were dated 1934 which is when they sold their corner grocery store on Cadiz Street in New Orleans many years ago. When they moved from the city they purchased a small house in Jefferson Parish. Later in life they purchased a double so that my grandmother could live with them. That house I inherited is in an area that is experiencing rapid medical expansion and has grown substantially in value. They accomplished all of this with a limited income and wise management.
Most people resist the idea of budgets. I have heard feedback that it is too complicated…to many categories to post on a spread sheet and keep track of every month. For me it is a habit I incorporated many years ago and it allows me to live a life of abundance debt free. I have the things most important to my wife and me incorporated in our budget: tithing, household necessities, travel, rainy day fund, Christmas savings, entertainment and a few more incidentals.
The easiest way to establish a prosperity budget is to make a list of all fixed expenses like House Note, Insurance Premiums, Car Expenses, Medical, Tithing and Savings. On another page make a list of flexible expenses like travel, entertainment and gifts. These two lists should equal the income sourcing for the budget.
If I can offer any additional help in getting you started on using this practice just send me an email at email@example.com.
In future postings I will discuss how establishing buckets of income streams have worked for me living on a fixed retirement income. Having a budget made this happen for us along with the guidance of great professionals.