Auburn finance expert says personal budgeting critical to healthy finances in 2022

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Inflation and interest rates are expected to rise in 2022, so now is the time to develop a personal budget to ensure a healthy financial picture. Damion McIntosh, senior lecturer of finance in Auburn University’s Harbert College of Business, says individuals should review their finances, document everything, ask critical questions and put a plan in place.

What are the benefits of a personal financial budget?

A personal financial budget offers many benefits, such as the ability to track and manage your expenses and having an accountability tool for your financial goals, financial emergencies or major financial decisions.

Where does a person start (especially for someone who has never had a budget)?

The starting point is documentation. Document your financial goals. Document your forthcoming income. Document your forthcoming expenses.

What are common categories for a budget?

The two major budget categories are budgeted income and budgeted expenses. The difference between these two items will determine the net surplus or deficit. Do not be overly optimistic when budgeting your income. You can always review and revise your budgeted income once you determine how much additional income is needed in any period to cover your expenses after completing your budget.

The two major budgeted expense categories are nondiscretionary expenses and discretionary expenses.  Nondiscretionary expenses are expenses that are inescapable or unavoidable (for example, rent/mortgage, taxes, debt payments, etc.). Discretionary expenses are expenses that are avoidable and can be curtailed or controlled (for example, entertainment, eating out, etc.). Saving/investing toward your financial goals, financial emergencies or major financial decisions should be treated as a mandatory expense. Therefore, the presence of any net surplus can be used to increase saving/investment or increase curtailed discretionary expenses.

What are some surprises found by most people when they do a budget?

Most persons tend to be surprised on their spending patterns/habits, especially the amount of money they spend on shopping online for nonessentials, entertainment and eating out.

If a person cuts expenses, what should be done with any extra cash?

Anyone who is able to reduce aggregate expenses should use the surplus cash to increase savings/investing toward financial goals, financial emergencies or major financial decisions.

Are there any other helpful tips for healthy finances in the coming year?

You should engage in financial meditation as soon as possible. This is time spent reviewing your financial circumstances and developing an action plan for the coming year. You should ask yourself critical questions and find the answers during this time. Do you have the best credit card offering that suits you (for example, no annual fee and maximum reward benefits)? Interest rates will increase this coming year, which means interest rates on credit cards will also increase. As a result, you should pay your credit card bills in full and when due to avoid interest and late charges. Making the minimum payments is not enough. This may also mean that you should not spend what you cannot earn to repay in full.

Are you managing your debt payments to positively impact your credit score? Structure or renegotiate your debt payments to avoid default or late payments. Inflation and supply chain issues are reflected in higher prices now and the coming year, which means we should review our spending habits/patterns to determine slacks which can be eliminated. This may result in eliminating name-brand grocery items and purchasing high-quality store-brand items. It may also involve making dinner at home instead of eating out. This financial mediation also allows time for financial planning. Start your meditation now rather than later.

About Damion McIntosh:

Damion McIntosh, senior lecturer of finance in Auburn University’s Harbert College of Business, holds a doctorate in finance and is a certified finance manager, certified management accountant, U.S. certified public accountant and certified anti-money laundering specialist. He also is a banking supervision advisor with the International Monetary Fund and an independent consultant on financial institution regulatory and supervisory issues. Most of his professional experiences have been in financial institutions regulation and supervision with Jamaica’s Central Bank, having served as deputy director of the Central Bank’s Bank Regulatory Policy Department.

More Information To arrange an interview with our expert, please contact Charles Martin in Auburn Advancement Communications at

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