You Can if You Plan

Whether this is your first or fifteenth time creating a budget, it doesn’t matter because the most important thing is to find a budget that WORKS. We recommend following these steps to find your sweet spot, set your goals, and succeed in 2017!

Decide what your budgeting strategy is

First you should decide HOW you want your budget to work.

Do you need to cut back on personal spending? Give the envelope budgeting system a try.

If you’re a budgeting newbie, start with using the 50-30-20 rule:

• 50% for fixed expenses (rent, utilities, groceries, phone bill, etc.)
• 30% for discretionary spending (a.k.a “fun money”)
• 20% debt repayment and savings (student loans, credit cards, retirement, etc.)

Maybe you simply want to pay your bills and then spend the leftover however you’d like. In that case, take your monthly take-home pay and subtract your monthly fixed expenses, financial goal contributions and any non-monthly savings contribution you’re setting aside. Now that you’ve accounted for your expenses and goals, what’s left over is your flexible spending amount!

Pay, then play

Always pay yourself first! If you spend first and then assume you’ll make savings or debt payments at the end of the month with what is left over, you’ll be disappointed every time. After paying yourself, if you really want to make progress toward your goals, you can always allot yourself less “fun money”.

Budget to spend

Research shows that if you allow yourself indulgences here and there, you’re less likely to completely derail from your goals. Make sure to budget some fun personal splurges big or small to avoid budget burn out.

Evaluate and tweak

Regularly review your spending. This allows you to correct the course and make adjustments if for example, you notice that you’re spending too much on clothing or paying too much credit card interest. Using the categorize transactions feature in our online banking can help you with this.

Set up an emergency fund

This is a separate savings account where you have enough money stashed away for true emergencies: loss of your job, major car repair, and illness. This is money to get you through those tough times, which inevitably will come. Even if you have debt to pay off, it might be a good idea to establish the emergency fund first. If you spent all of your money paying off debt and had no e-fund, then in the event of an emergency, you’d have to use the cards again. Emergency funds break the debt-payoff-debt cycle.

Use our resources to help

Budgeting can be hard to love. But it is an important way to discover problem areas and keep your finances on track. Our budgeting calculators here can make the task easier. If your budget process leaves you feeling frustrated, please come and see us. We may have products or services that can ease your stress by improving the interest rates you pay on your debt or earn on your deposits and get your overall financial picture headed in the right direction.