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What type of budgeter are you?

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Based on your financial personality there is at least one budget that should work for you. However, some budgeters are likely to retire with enough money, while others are likely to always have to deal with financial emergencies.

What is your budget personality?

The 60/40 budgeter cannot stand debt unless it is investment debt, such as for a home or post-secondary education. They pay off debts quickly, even if the interest rate is very low. This type of budgeter only uses credit cards for convenience purposes and probably uses a debit card or cash to pay for most purchases. They are more likely to have a 10 or 15-year mortgage instead of a 30-year mortgage. The 60/40 budgeter often spends and saves based on the following:

Sixty percent--for day-to-day expenses, such as food, housing, utility bills, insurance, or credit that will be paid in full each month. Ten percent--for financial emergencies; once they have saved six months to a year of salary, they will increase their savings in other areas, based on their values and lifestyle.

Ten percent--for large purchases such as a car or family vacation.

Ten percent--for children's education.

Ten percent--for retirement (or 20 percent if they have one or no children).

This type of budgeter may be the millionaire from middle-class America.

They live a very simple life and never worry much about money, because they always live on less money than they make.

The Automatic and Pay Yourself First Budgeter wants to simplify their lives and do not want to think about money issues.

The only decision they make is how much they want to save and invest. Their investments are predetermined and they pay their credit card balances in full each month. Almost everything else is automatically paid via automatic withdrawals from their checking account.

This leaves them free to spend the remainder of their income as they wish. They usually retire well-off, since their home is paid off and they have invested monthly using cost averaging and lifecycle mutual funds.

This type of budgeter does not want to spend much time thinking about money. They do not want to be active money managers. They probably have a 30-year mortgage so they will have more money to spend on cars, traveling, etc.

They are more likely to have a lifecycle mutual fund based on the year they plan to retire.

With this type of investment they do not have to get involved in making future retirement investment decisions.

The decisions are made automatically based on their age.

The Make Ends Meet budgeter: These budgeters are savers, but not investors. They do not learn to take calculated risks to make their money grow. They keep their spending under control, but never prepare a formal budget or track their expenditures. Most Make Ends Meet budgeters pay their credit card balances in full each month. They are more likely to buy certificates of deposit and fixed annuities for retirement versus investing in the stock market. They are less likely to put money away for children's education. Since they often do not have emergency funds, they could be in financial difficulty when one does occur.



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© 2010 The Times-Argus Central City, Kentucky. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from DAS.

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