Budget: It’s time you made one.
May 11, 2012 | Alliant Credit Union
Living paycheck to paycheck is not uncommon and finding finances for an extra date night or home improvements doesn't always come easy, which is why it is time for a budget. The term shouldn't be foreign; it also shouldn't be feared. Budgets are a great way to understand where your money is coming from, where it is going and how you can prepare for any expenses, planned or unplanned.
Step One: Start a list.
Start a list of everything purchased (including the price) over a month timeframe, marking which items are required expenses and which are "luxuries" (lattes, shoes, impulse buys). In the beginning, spending habits should remain identical, giving a true sense of where you are spending the most. Keep this record to the penny, this leaves you less room for error.
Step Two: Evaluate the list & start making changes.
Once you have recorded a month of spending, evaluate your list and compare it to your take-home pay. Is there a negative balance, or is the total a little too low for comfort? Seeing your finances in this list should inspire you to make some changes and reevaluate how much you spend monthly. This is where the "luxuries" side of the list needs to shift: It could be as simple as packing your lunch every day or shopping at discount grocery stores.
Step Three: Start saving.
It is important to factor saving into your budget. Once you get used to your new routine of spending less, you can begin saving more. Utilizing online and mobile banking tools, you can create budgets and monitor your money flow with our Personal Finance Management tool (PFM) in online banking. Link your accounts (not only at Alliant) and automatically keep track of your spending to help achieve your financial goals. If you know your credit card bill is going to be $100 less this month, put that $100 into your savings account when you can. Transfers between your accounts in online banking are instant. These small transfers will begin to add up, building your nest for future expenses.
Step Four: Stick to it!
Writing the list is easy. Sticking to it is hard. Give yourself small rewards along the way to inspire continued budgeting. If you've cut morning lattes out of your budget entirely, stop once every few weeks as a reward to yourself for sticking to your budget. If you are able, use smart phone applications for the credit cards you have, making sure every week you are on-track with your spending. Getting to the checkout line at the grocery store is much less stressful when you know you stuck to your list and will be at or under the amount you have budgeted for the trip.
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