Markwei Boye Financial Planner
Southfield, MI—Markwei Boye is the CEO and owner of Smart Financial Advisors, PLLC, an independent personal financial planning and investment advisory firm. He holds a Bachelors of Science degree in Finance from the University of Detroit Mercy, a Masters in Business Administration (MBA) from Wayne State University and recently completed his coursework for his doctorate degree in Business Management from Argosy University of Chicago. He is a member of the Registered Financial Planning Institute, National Association of Enrolled Agents, National Association of Tax Professionals and National Society of Accountants.
Budgeting can be simple or complex, based on your income and lifestyle. Regardless of the complexity, you must develop a budget that pays you first if you wish to save and invest. Here are four tips that can help you proceed down the road to healthier financial times:
Evaluate What You Spend. Begin the process by recording all your expenses. Start with living expenses including rent or mortgage, utilities and taxes. Add services, such as child daycare, then follow with necessities like food, clothing, medical expenses, and insurance costs. Remember to include entertainment, even if only a night at the movies and the cost of a babysitter. At this point, most lists end, but you must add one more line labeled "my investments and savings." If you treat investments and savings as an expense, which needs to be made on a weekly or monthly basis, you are a lot closer to setting money aside not only for your most important expenses, but also for yourself.
Allocate Income in Terms of Percentages. Determining what percentage of your income is allocated to each expense is critical to your success in developing a budget. Trimming expenses a little bit at a time vs. large cuts taken all of a sudden will be much easier to manage. By categorizing expenses as either fixed or flexible, you can determine where percentage cuts can be made. Remember, you have discretion over flexible expenses, but not over those that are fixed, and it is generally flexible expenses that erode earnings.
Set Up Spending Priorities. Ranking expenses is your next step. You can then eliminate the unimportant items, which in itself may be enough to allow the beginning of a modest investment and savings program. If you’re still not where you wish to be, you may need to eliminate some of the moderately important expenditures.
Pay Yourself First. You should now be able to pay yourself first. To do so, you should get into the habit of writing out a check to a special account rather than leaving the amount in your regular checking account. What type of special account you use depends on how much you have. If you begin with two hundred dollars, it might be a savings account or money market fund. If you are retirement-minded, and you qualify, contributions to an Individual Retirement Account (IRA) might better suit your needs.
In addition, most insurance companies and mutual funds have established monthly checking account deduction plans that allow you to make a regular contribution of a fixed amount each month to a wide variety of funding choices. This method can help establish a more disciplined approach to savings.
A periodic review of your budget, with the understanding that you must always make room to pay yourself first, is important to your long-term financial success. Visit http://smartfinancialadvisors.com/
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