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Building Models for Budgeting and Financial Planning in a Recession

Miramar, FL - July 23, 2009 - Chances are you or someone you know has been hit hard during our current economic recession. Knowing when and how much to spend or save can seem daunting when faced with the present economic crisis. We are a consumer society where bills have to be paid, mouths have to be fed and life is certain to carry on. There are ways of building your own financial models for budgeting and financial planning so that you can deal with the ever present financial obstacles of life while weathering the storm of a recession. Budgeting, strategic financial planning and simple common sense are several ways to start.

You can begin with creating or perhaps revising a realistic and working budget. The first step of financial budgeting is calculating your net income, factoring in dividends from investments, alimony or child support. Once you have accurately accounted for these figures you can move on to your expenses. Your expenses will generally fall into one of two categories: fixed or variable. Your fixed expenses may include your mortgage/rent, car payment, and certain utilities such as cable and internet. Examples of variable expenses are groceries, clothing, entertainment, gas, going out to eat and even savings.  A budget allows for you to examine how much money you make and where it goes. It also gives you an opportunity to make changes where needed. This brings us to strategic financial planning and budgeting.
You can start this process by deciding where to make adjustments in your budget. Budget variable expenses by cutting back on eating out, buying non-label or generic items and, making local plans rather than vacationing out of town. Building a financial model for budgeting variable expenses is a good first step in financial planning, but making adjustments to your fixed expenses may also need to happen in order to adhere to your financial planning strategy.

Being prepared for the worst may be the best attitude to adopt in our current economic situation. Increasing the amount of money that's put into your savings could prove to be beneficial. Some financial planning advisors suggest building a three to six month emergency savings fund model into your financial budget so that you can address any unforeseeable occurrences. Accumulation of this savings fund may take time and require you to start with small manageable goals.
Decide on a schedule for your savings deposits and stick to it. This can be a habit that will pay off for your hard work and consistency.

Be ready to make good financial choices for you and your family during this recession with sound judgment, financial planning and realistic obtainable budget. You will have to decide if making investments or large purchases is right for you during this recession and budget your variable expenses. You may even need to look at scaling back on your current way of living in addition to budgeting your variable expenses, such as moving into a smaller more affordable home or reducing the amount of vehicles that your family currently owns and maintains. Tough economic times call for tough financial planning and budgeting decisions to be made. Good common sense can be your compass when building financial models for you and your loved ones.

About TFCU:
Tropical Financial Credit Union has been offering quality products for customers for over 73 years. This fully accredited credit union is open for all residents of Dade, Broward and Palm Beach counties in South Florida, regardless of where they work. They continually expand and offer the best current interest rates on used car loans, mortgage rates and other deposits and loan products. As always, they continue to offer free individual and business checking in Florida throughout their branches and for all their members. For more information please visit www.tropicalfcu.org.