Living Margin Action Steps

A living margin budget is a financial planning concept that involves allocating a portion of your income towards essentials such as housing, food, transportation, and healthcare while setting aside funds for savings, investments, and flexible “discretionary” spending.

The "living margin" refers to the difference between your income and essential expenses, ideally providing a buffer or margin for unexpected costs or savings goals. It's essentially a structured way to ensure you're living within your means while preparing for future financial needs.

Creating a living margin budget involves several steps:

1. **Assess Your Income:** Start by determining your total monthly income from all sources. This includes salaries, wages, bonuses, rental income, investments, and other money sources.

2. **List Your Fixed Costs (i.e., Essential Expenses):** Identify and list your monthly expenses. These typically include:
   - Housing (rent or mortgage payments)
   - Utilities (electricity, water, gas, internet, etc.)
   - Food (groceries and dining out)
   - Transportation (car payments, insurance, fuel, public transportation)
   - Healthcare (insurance premiums, prescriptions, co-pays)
   - Debt Payments (credit cards, loans, etc. - can be under fixed costs or financial gaols)

3. **Calculate Your Living Margin:** Subtract your total fixed costs (essential expenses) from your monthly income to find your living margin. This represents the money you have left over after covering your basic needs.

4. **Set Financial Goals:** Decide how much you want to give, save, and/or invest monthly. This could include contributions to retirement accounts, emergency funds, or other savings goals.

5. **Allocate Flexible (Discretionary) Spending:** Determine how much you want to allocate for discretionary spending. This category covers non-essential expenses like entertainment, dining out, hobbies, and shopping.

6. **Adjust as Needed:** Review your budget regularly to track your spending and ensure you stay within your means. Adjust your budget as your income or expenses change, and prioritize saving and investing for long-term financial goals.

7. **Emergency Fund:** It's crucial to build an emergency fund that can cover at least 3-6 months' worth of essential expenses. This fund acts as a safety net in case of unexpected expenses or loss of income.

8. **Seek Professional Advice if Necessary:** If you're unsure about creating or managing your budget, consider seeking advice from a financial advisor or counselor who can provide personalized guidance based on your financial situation and goals.

Following these steps, you can create a living margin budget that helps you live within your means, save for the future, and achieve your financial objectives.