Getting your budget on track, paying off bills, and saving more money are ongoing financial challenges. These are all important things to focus on as you work toward fiscal fitness for you and your family, but do you have a plan to help you achieve these things?
Simply getting started on the right financial path can feel overwhelming. The best place to start is by a close look at your spending. You should also know exactly how much you are spending on groceries, gas, coffee, etc. This process of combing through spending and itemizing each purchase can seem like a big job, but money management software can actually automate the process and quickly give you a breakdown on spending by categories. There are also countless apps to help with budgeting, too – and many are free!
Here are some basic guidelines for evaluating spending and getting a handle on your monthly budget.
- Total income:
The first step to writing a budget is determining how much money you make every month. Income can come from salary, investments, benefits, etc. - Fixed/regular expenses:
Next, take a look at your fixed expenses. Add up any mortgage or rent payments, loan payments, credit card payments, utilities, groceries, insurance, gas, etc. Then subtract them from your total income to get your leftover, disposable income.
Your disposable income is the amount of money you have left over each month to spend on discretionary expenses and/or to save.
- Discretionary expenses:
Make an estimate for other expenses over the next month – like eating out, coffee with friends, or clothes. Don’t forget to include any less regular but still mandatory expenses like getting the oil changed in your car. Subtract these expenses from your disposable income. - Save:
If you have money left over after all expenses are met, you might consider putting those dollars into savings. If you would like to save more money, see if there are any discretionary expenses that you might be able to cut back on. Can the new pair of shoes wait? Could you eat out less? Then put that money into savings.When it comes to savings, putting aside even a few dollars each month adds up!
Need additional help getting your finances on track?
Budgeting for college students:
https://studentaid.gov/resources/prepare-for-college/students/budgeting
Steps to a better budget by NerdWallet:
https://www.nerdwallet.com/article/finance/how-to-budget
Budget worksheet:
https://consumer.gov/sites/default/files/pdf-1020-make-budget-worksheet_form.pdf
