The Carr Report: You need a budget!

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Several years ago, I wrote an article titled, “I’m talking to YOU.” In that article I wanted to be very clear who I was talking to.  I was talking to YOU!

I wrote that particular article after observing people tell me, so and so can use my advice. It was their mother, father, sibling, uncle, aunt, grandparent, cousin, friend. Never themselves. Let me state for the record, no one is exempt from sound financial advice. NO ONE! When I say “You need a budget,” I’m talking to YOU. 

A budget is a spending, savings and investment plan. A budget helps you:

  • Prioritize your financial goals
  • Manage your cash-flow (Income and expenses)
  • Identify areas of overspending
  • Identify areas of undersaving
  • Understand your debt exposure
  • Act your wage

We all tend to fall short in one area or two when it comes to managing our money, be it overspending, under-saving, or poor money management. Instead of taking a hard look at our finances to ascertain and correct what’s causing our financial woes, we turn a blind eye to it, hoping it will fix itself and praying things will work out in the end. 

When it comes to money management, hope is not a financial plan. You have to “Boss-up” by being proactive, telling your money what to do—not reactive, wondering where your money went. Without a budget, money becomes a great magician. It can disappear right before your eyes in plain sight.

Money isn’t everything, but when it comes to importance it ranks right up there with oxygen. The truth of the matter is money and personal finances are an important aspect of everyone’s life, for practically everything we desire in life has a price tag attached to it. Like oxygen, we need money for our very survival.

The first step to sound personal finances is creating a budget. It involves monitoring and tracking your income and expenses. It is essential to understand your monthly cash inflow and outflow to keep a tab on your spending habits. Creating a budget helps you identify the areas where you are overspending and make necessary adjustments to your spending habits.

Once you have identified the areas where you tend to overspend, it is important to prioritize your expenses. Paying off your debts should be on the top of the list —especially those high-interest rate credit cards.  Keeping a low credit utilization ratio is essential for maintaining a good credit score. Credit cards can have a huge impact on your credit scores because it’s the biggest contributor to the utilization ratio. To have a good credit score it’s recommended that your utilization ratio be at 30 percent of your credit limit or lower. To have an excellent credit score, you’d want to keep the utilization ratio at 10 percent or lower.

Personal finance is an important aspect of everyone’s life. It involves managing your money in a way that you can provide for your family, pay bills, and have a life all while achieving your financial goals and having a stable financial future. Here are some tips to help you make the most out of your personal finances.


Budgeting and financial planning go hand and hand. The difference being financial planning is more comprehensive. Budgeting is a key component of personal finance that involves creating a plan for your income and expenses. It helps you keep track of your spending and ensure that you don’t overspend. Create a budget that aligns with your financial goals and stick to it. It will help you avoid unnecessary expenses and plan for your financial future.

Saving and Investing

I’ve worked with people who have good paying jobs, high credit scores, and no savings to speak of. I’ve come to understand that money problems don’t show up in one’s ability to work hard and pay their bills on time. Money problems show up in one’s inability to consistently save and invest money.  Saving and investing are vital components of personal finance that can help you achieve your financial goals. Saving involves setting aside a portion of your income for future use, while investing involves putting your money to work for you by purchasing investment vehicles such as stocks, bonds, or mutual funds. It’s important to research and understand your investment options before investing your money.

Managing Debt

Debt is an offspring of credit. Credit has inflated the cost of goods and services on everything to a point; we can’t imagine making purchases without financing it. Debt is hazardous to your wealth! Knowing that people will continue using credit, I created financial guardrails to follow to help us avoid going into so much debt that our finances fall in the gutter.  Debt management is a significant aspect of personal finance. Managing your debt can help you avoid financial stress and improve your credit score. If you have multiple debts, consider consolidating them or creating an aggressive, methodical repayment plan to pay them off quickly.

Building an Emergency Fund

Life is full of surprises, unexpected events and unexpected expenses, also known as emergencies. When they happen, it usually costs us money. Money we don’t have. Financial emergencies can happen at any time and having an emergency fund can provide you with a financial cushion to help you weather the storm. Although it’s recommended to create an emergency fund that can cover anywhere from at least 3 to 12 months of your living expenses, that advice isn’t practical for everyone. Set a realistic emergency fund goal for yourself, be it $500 or $1,000. Over time, work towards having a fully funded emergency fund.  In the event of an emergency, you will have the financial cushion you need to deal with unexpected expenses or loss of income.

Planning for Retirement

We all dream of the day of hanging up our working shoes forever! However, there’s always one expense or another causing us to delay focusing on both saving and planning for retirement. Being that retirement is in the distant future in comparison to other financial goals, we tend to focus on it last. Bad idea!  Planning for retirement is essential to ensure that you have enough money to live comfortably when you retire. Start saving for your retirement as early as possible and create a retirement plan that aligns with your financial goals. Remember, your retirement savings is your future paycheck.

In conclusion, while personal finances can be complex, managing your money well is crucial to maintaining financial stability and achieving your financial goals. By taking the time to create a budget, save, invest, manage your debt, build an emergency fund and plan for retirement, you can have a stable financial future. Start taking control of your finances today, and you will reap the rewards in the future.

(Damon Carr, Money Coach can be reached at 412-216-1013 or visit his website @



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