1. Sue Kalt

    After years of managing my budget, I basically have boiled things down to necessities and wants. The necessities are those things on which survival is based: Utilities (water, electricity, heating, phone, garbage), Shelter (pesky home mortgage and/or property taxes), Medical (all things medical/dental/vision, including insurance premiums), Transportation (all things related to transportation – car, insurance, gas, bus, repairs), and SAVINGS. These are the MUSTS expenses (medical, utilities, shelter, transport, savings). An shorter version of the HUMAN TIES.
    Everything else is a WANT and wants must be scrutinized as to their necessity. There is no MISC or OTHER category. I tell folks to avoid those two items in their budget. Every dollar allocation must have a name, otherwise the OTHER and MISC category govern all.
    The savings is not a want but a necessity and must be treated as such, otherwise it is too easy to spend it on things of no lasting value. I am always amazed when folks tell me they “invested” money in buying a new car. Wrong, that is not an investment (unless the car is an antique and valued as such), rather it is an expense.
    People over use the word,”investment” rather than an expense. Unless something appreciates in value, it is not an investment, it is an expense. Even investments can loose value. That priceless vase can lose value if it cracks or gets damaged. That house you thought was an investment can lose value and can become a real money pit — crumbling foundation, tree falling on roof, earthquake, flooded basement, leaky plumbing, etc.
    Treat every dollar with respect and evaluate whether you really need to spend or save it. Every decision has its pluses and minuses. I have been known to talk myself out of buying something by just waiting a few days. Do I really need one more pair of shoes, do I really need that cake mix, do I really need that blender, etc. Most often the answer is a “No!”

    1. Sue,
      I completely agree with you that “investment” and automobile don’t really belong together. When I hear that, I cringe.
      The good part is that there is money to be saved in both the “need to live” category as well as the “want” category. Actually, it seems that due to human nature it’s usually easier to reduce the former category while allowing yourself some (albeit small) indulgences in the latter category.
      As always, I appreciate your opinion on this topic and your method for budgeting sounds like it works well for you. Thank you.

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