Building An Effective Budget
Looking to manage your money better, save, and stay on top of your budget? We're here to help!
Let's start by covering some basic budgeting principles.
Begin with a Payment Calendar. To make an effective budget, it's crucial to know when money is coming in and going out. To gain clarity, create a payment calendar. Begin by printing a basic 30-day calendar and noting due dates for fixed expenses (rent, car payment, internet, etc.). Then, mark down the dates you'll receive income. This will help you understand your spending pattern.
Add up your fixed monthly expenses in a spreadsheet or journal. Create another section for variable expenses like groceries or utilities. Combining these gives you an estimate of your monthly expenses.
Next, list your expected monthly income in a separate section. Subtract your total expenses from your income. This will show if you have extra (a surplus) or if you're short (a deficit). For a surplus, decide what to do with the extra money. If there's a deficit, consider boosting income or cutting expenses. It's not always easy, but understanding your surplus or deficit guides you toward a healthier financial path.
Lastly, create a spending plan. If you find your expenses surpassing your income, crafting a spending plan to match your income can be empowering. Set goals for controllable expenses and track your progress through the month. Tracking income and expenses in the initial months maximizes your budget's benefits. If you end up with a surplus, consider saving for a down payment, investing for retirement, or building an emergency fund for unexpected times.
In summary, building a budget can be a powerful step in taking control of your finances. To help you get started, we listed a few trusted resources below:
You Need A Budget
CFPB Resources
www.consumerfinance.gov/about-us/blog/budgeting-how-to-create-a-budget-and-stick-with-it/
Free Budget Resources from CFPB
s3.amazonaws.com/files.consumerfinance.gov/f/documents/cfpb_well-being_monthly-budget.pdf