Rupa Pereira
By Rupa Pereira
When working with my clients through their financial plans, I’ve noticed that budgeting or cashflow management is not something they enjoy or wish to be reminded of. It seems rather an arduous task and not as glamorous as having a shiny investment portfolio. Allow me to shatter that myth – a balanced budget is a building block for lasting wealth and prosperity. Case in point, the news around our US budget deficit has been hogging the headlines upending both ends of the aisle. Yes, our household numbers don’t have a Trillion attached to them, but it’s meaningful enough to keep wheels moving smoothly in our homes and avoid derailment.
Balancing comes down to simple math. When income exceeds expenses, we’re in a happy place since there’s something to save for a rainy day. However, income can vary, and lifestyle creep can set in, and the picture can start to get hazy.
So how do we get ahead of the equation? Balancing a household budget requires planning, discipline, and a solid understanding of income and expenses. Listed below are some key strategies to help stay on track:
Track Your Income and Expenses
• List all sources of income (salary, side gigs, rental income, etc.) and start with your monthly income net of taxes.
• Track your fixed expenses (rent/mortgage, utilities, insurance, loan payments).
• Monitor variable expenses (groceries, dining, entertainment, shopping).
• Use budgeting apps (like MonarchMoney, YNAB, or EveryDollar) or spreadsheets to stay organized.
Cut Unnecessary Expenses
• Cancel unused subscriptions and memberships.
• Cook at home instead of eating out.
• Shop for deals and use cashback apps.
• Switch to more affordable service providers (insurance, phone, internet).
Set Financial Goals
• Define short-term (saving for a trip, emergency fund) and long-term (buying a home, retirement) goals.
• Prioritize debt repayment (especially high-interest debt like credit cards).
• Automate savings to build a safety net.
Use the Envelope or Zero-Based Budgeting Method
• Envelope Method: Allocate cash into envelopes for specific spending categories (groceries, gas, entertainment). Once the money is gone, no more spending.
• Zero-Based Budgeting: Assign every dollar a purpose so income minus expenses equals zero.
Build an Emergency Fund
• Aim for 3-6 months of essential expenses saved in a separate account.
• Start small if needed (e.g., $10-20 per paycheck).
Review and Adjust Regularly
• Check your budget monthly and make necessary adjustments.
• Track progress on savings and financial goals.
Debt is simply the imbalance between income and expenses and fills the income void especially on big ticket items such as home purchases or higher education, but lately it has been creeping up on monthly budget in the form of personal debt such as credit card debt. Here are some sobering facts to drive home the gravity of this issue.
As of February 2, 2025, the United States faces a significant national debt challenge, with the total federal debt exceeding $36 trillion. As of the third quarter of 2024, U.S. consumers held a total debt of $17.94 trillion, marking an increase of $147 billion (0.8%) from the previous quarter. The largest component, mortgage balances grew by $75 billion, totaling $12.59 trillion. The Non-Mortgage Debt category encompasses various types of consumer debt. Auto Loans and Leases: Representing 35.4% of non-mortgage debt. Student Loans: Accounting for 30.0% of non-mortgage debt. Credit Card Debt: Comprising 23.6% of non-mortgage debt with record high delinquencies. The average interest rate on credit cards was 23.37% as late 2024. Think about that; for every $ borrowed, almost 25 cents is paid back as interest!
Thus, I leave you with simple means to recognize the significance of balancing a budget – poetically.
A family’s budget, a careful plan,
To stretch each dollar, hand in hand.
With wisdom, patience, goals in sight,
They find their way, both day and night.
Step One: Track What Comes and Goes
Write down earnings, every cent,
Know where your hard-earned money went.
From paychecks bright to side-gig streams,
Count each dollar, build your dreams.
Step Two: Needs Before the Wants
Rent and food must top the chart,
Utilities, loans—play your part.
That shiny gadget, dinner out?
If cash is tight, do without.
Step Three: Save for Rainy Days
A stash of funds for times unknown,
Will keep your family safely grown.
A little now, a little more,
A shield when troubles come ashore.
Step Four: Cut the Extra Fluff
Subscriptions lurk, so trim them down,
Compare your bills, don’t wear a frown.
Cook at home, mend what you wear,
Small steps make finances fair.
Step Five: Plan for Every Goal
A house, a trip, a college dream,
A budget makes them more than scheme.
With patience, work, and spending tight,
Your future glows in saving’s light.
Step Six: Keep Debt in Check
Credit cards can weigh you low,
Pay on time, let interest go.
Snowball debts, knock out the small,
Then tackle big ones, clear them all.
A Balanced Budget, A Happy Home
With discipline and love combined,
A brighter future, peace of mind.
So plan, adjust, and stay aware,
Your family’s wealth grows strong and fair.
Rupa Pereira is a CFP, EA, CSLP and an Advice-Only Planner and Tax Professional based in North Carolina. She specializes in cross-border matters and all things financial planning. Contact: [email protected]
