April 4, 2022
It’s safe to say that everyone would like to be in better control of their spending and closer to meeting their financial goals. And while those goals look different for everyone, the way to reach them is the same across the board. Create a budget that works for you and stick to it! But we understand that can be easier said than done, so we’ve put together a few tips to help you get started.
- Figure out how much you make a month. This will include income from your regular set paycheck, as well as any other outside sources of income like child support or social security.
- Make the most complete list possible of your monthly expenses. Start with larger expenses like your rent or mortgage payment, car payments, insurance, utilities, student loan payments, childcare and groceries. But don’t forget to include other expenses like entertainment, eating out, travel and personal care costs. A good way to get a solid list of your expenses is to go back over your last several months of bank statements.
- Divide your expenses into two categories: Fixed and Variable. Fixed expenses are necessities that stay the same from month-to-month such as rent/mortgage, bills, car payments, student loan payments, etc. Variable expenses change and include expenses like eating out, buying gifts, and gasoline expenditures. Total up the amount for both Fixed and Variable expense categories—this will help you stay on track.
- Take a good, hard look at your variable expenses. See if there is a way you can lower your expenses by cutting out (or down) on things that aren’t necessities. The total of your expenses should be equal to, or less than your income to ensure that you’re not overspending. If you’re working towards a savings goal, your expenses will need to be less than your income. The money leftover should be put into a savings account.
- Use your budget! A budget only works if you use it. You’ll need to track your spending regularly and tracking your expenses can help you identify unnecessary or problematic spending.
- Make changes. As your income or savings goals change, your budget can change, too. If you need to save more, you know that you need to lower your expenses.
Maybe the most helpful budgeting tip of all is that a budget only works if you are honest with yourself about both your income and expenses. It can be jarring to dig into and track where you’re spending your money, but it’s the only way to get a handle on your spending.
While it may not be a fun chore, creating and sticking to a budget will help you meet your financial goals and that’s a win in our book!