Budgeting
Need to Hone in On Your Spending?
A budget is a tool that helps you keep track of your money and spending habits. It includes an estimate of your income and expenses and serves as a guide to help you achieve financial freedom and peace of mind.

Budgeting

Identify your wants versus your needs. Examples of needs include mortgage/rent, utilities, groceries, insurance and other bills. Wants may include cable, extra services on your phone, dining out, trips to the salon and movies. Track your spending habits from the last few months to give you a better idea of where your money is being spent. This will allow you to make sound decisions for the future based on actual spending habits.

Re-evaluate spending and goals frequently as they can change for both short-term and long-term planning.

  1. Gather your statements, bills and receipts from the previous month. Use a budget spreadsheet, online or printed, or simply write down items on a blank sheet of paper. Start categorizing your spending habits under different topics such as Utilities, Gas, Groceries, Insurance, Child Care, etc.
  2. Determine how much of your monthly income you are going to save. Most experts recommend that you save at least 10% of your income.
  3. Determine your monthly income. Include all income, such as salary, Social Security, child support, etc.
  4. List out all your expenses and edit your categories as needed.
  5. Subtract your expenses from your income. If this number is positive, you have money left over to save or invest. If this number is negative, you are spending more than you are earning (and may be paying fees on top of your existing expenses).
  6. Based on your income and current spending, determine the amount of income that needs to be allocated to each item. (For example, allocate 30% to mortgage/rent).
  7. Determine ways you can improve your spending and saving habits. Set goals. (How much do I want to save? How can I cut back on dining out, clothing, or my cable bill?) In order to save, your budget allotments cannot add up to 100%. If they do, you are spending everything you earn.
  8. Budget Worksheet (requires spreadsheet software)
  • Budgeting and My Checking Account
    • Do not write a post-dated check.
    • Do not write a check if enough money is not available in your checking account to cover it. The check will hit your account very quickly in most cases.
    • Use duplicate checks so you can track your spending easily.
    • Keep a transaction record of all automatic payments, online bill payments, debit/ATM purchases, and checks.
    • Set up mobile banking and review it regularly to always have the most updated account information available in terms of balances or transactions impacting your account.
    • Review your statements from the bank online or by mail and report any errors immediately.
    • Remember to include online bill pay or automatic withdrawals in your account register. Also, remember that you may have items that haven't cleared your account yet.
  • Reduce Your Expenses
    • Pack your lunch.
    • Make coffee at home.
    • Get rid of extras on your phone and cable.
    • Use coupons, Groupons, and deals from e-mail signups.
    • Ask for discounts; military, veteran, teacher.
    • Stick to shopping lists.
  • Pay Bills On Time
    • Create and use a spending plan. When will you spend money for groceries? When will you pay the utilities? Knowing when you spend your income is important.
    • Use a calendar or payment schedule.
    • Get organized.
    • Designate a bill-paying area.
    • Use a filing system that works for you.
  • If You Must Pay Late
    • Contact the company immediately and explain your situation� it never hurts to ask as they may waive your fee.
    • Look closely at which bills to pay late.
      • What are the late fees?
      • What is the interest rate?
    • Know the ramifications.
      • When will the company act upon your late payment?
      • Disconnection of service.
      • Late charges.
      • Reconnection fees.