By Jessica Szabo
WINNEMUCCA - February through April is tax time for many Americans. Some spend it anticipating a refund and planning a major purchase or opportunity to pay down existing debt, while others must send out additional funds. But gathering financial documents and preparing tax forms can always serve as an opportunity to create or revise one's personal monthly budget.
Most budgeting guides present budgeting as a simple process of writing one's income at the top of the page, listing necessary expenses, then dividing up any remaining money among hobbies, donations and vacation funds, but making and keeping a budget is difficult for many people.
Dr. Thomas Matula, chair of Business Administration at Great Basin College, explained that much of the struggle is due to a tendency to underestimate one's own expenses.
"Most individuals tend to underestimate what they actually spend each month," he explained. "When doing a budget, look at bank accounts, credit cards, etc. to see what you have actually spent over the last two to three months, then use that as the basis for estimating expenses in the budget."
Another obstacle in making and sticking to a budget may come up when people read or hear solid financial guidelines that sound impossible to follow, such as building up a special fund for unexpected expenses and putting money aside for long term emergencies. Dr. Matula strongly recommends building a fund for single unexpected expenses and an account designed to cover regular expenses in case of a sudden loss of income, but he urges people to build these funds gradually.
"It is important to create a fund for the unexpected, such as a car repair, medical emergency or vet bill. Then once you have a fund set up for such one-time emergencies you should plan to have a larger fund that could cover your costs for three to four months if you are laid off from your job, but neither is possible overnight," he explained. "You need to budget to set aside money from each check, say 10 percent or so, until you have first a fund for one-time emergencies and then a larger one in case you lose your job."
Most people realize that mortgage or rent, utility bills, groceries, school- and health-related expenses for children and money to pay for either car insurance and gas or public transportation passes are necessary and must be included in a budget. But there are many times when it is more difficult to determine if something is a need and must be a part of the budget, or merely something somebody wants that can be cut down or eliminated.
"The best way to determine need or want is to ask yourself what would happen if you postpone the spending for a month or two," Dr. Matula suggested. "If it won't have a major impact on your lifestyle, it is a want. If it will, it is a necessity."
While budgeting may take some extra record keeping and organization, creating and sticking to a budget does not mean a person will have to eliminate absolutely everything enjoyable from their life. Dr. Matula suggests tracking all spending over the same two- or three-month period to gain a realistic picture of one's necessary expenses, and looking over everything before deciding what areas must be cut.
"Most folks are often surprised at how much they spend on Starbucks or eating out once they start keeping records," he said. "Using these records, decide what you may reduce and what you really need to have."
Forming a personalized and realistic view of one's finances and creating a budget around individual needs then wants may be much less painful than simply plugging money into pre-determined slots from a general list, but living according to a budget can still sound like punishment to a lot of people, who see it as the end of carefree shopping sprees, spontaneous little treats and extra gear for their hobbies.
Dr. Matula points out that making and sticking to a budget allows people to enjoy their money more by reducing the stress of making financial decisions.
"The more control you have over your finances the more freedom you have," he stated. "A budget is the first step to gaining control over your finances. Once you have control, you may then buy things you want without having to feel guilty about it or worrying that you are not able to afford it."
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