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Budgeting and the Economy

April 5, 2011

When adjusting to the lifestyle that the economy has cornered us in to, finances play a huge role. We were reading this article for our own personal enlightenment, when it occurred to us that this advice isn’t too shabby for anyone planning a budget. Whether you’re trying to re-evaluate your personal finances or revamping your businesses, these tips can be helpful in any case (or any budget).

One of the most common misunderstandings is that if you aren’t making enough money than you therefore can’t save any. Untrue! Like the article suggests, if you break your income up into percentages, you can set aside 20% of your earnings (or more if it allows) for savings or paying off debt. Now it doesn’t matter if 20% is $5 or $5,000, the point is, you are setting aside a portion of your earnings for the future. Another good tip that they mentioned is when you’re paying off debt, it’s okay to prioritize. For example, debt can be classified into good and bad debt. Things that you receive no benefit from should be paid off as soon as possible, such as credit card debt or auto loans. Those would fall into the bad debt category. Things that have a little leeway and are considered good debt are student loans and mortgages because you receive tax advantages for both.

 Take the time to sit down and evaluate what your business or you personally can do to change your spending habits. Ask yourself realistically, what are you bringing in? What do you need and what do you want? With that in mind, what can you feasibly do without? And what can you afford to save? If you can afford to set aside more than 20% of your income, than by all means, do it!

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