The Yo-Yo Budget

August 20, 2019

Who doesn’t like to spend money?  We all work hard so we can enjoy things in life and a lot of the activities we do cost money.  Besides the essentials such as housing, transportation, and other bills, we also spend money on entertainment such as going out to eat, joining a sports team, weekly happy hour, or clothes. These expenses are not necessarily bad -- we need to enjoy life.

The issue is when we end up with a Yo-Yo budget and not a true spending plan.

A Yo-Yo budget is a budget that is all about the extremes: one month you save a ton, while the next month you spend a lot.  It is a short-sighted plan. One month you decide to buy a bunch of clothes and the next month you realize you spent too much last month -- now you have to save a lot to pay off the credit card.  Your budget bounces all over the place. 

How do you stop the cycle?

The answer is to determine what is important to you and to plan for it.  If you like to go out to eat, then plan to go out a few times a month by budgeting for this.  Also, make sure you are still fulfilling those long-term dreams of saving for a house or for retirement.  With thoughtful planning, you can have your cake and eat it too.

Meeting with a financial advisor can help you establish and stay on track with your long-term goals. Call Adam Hogue to set up an appointment to set a budget.