Budgeting Tips for Financial Security You Can Start Today

Budgeting is your go-to financial ally when it comes to saving for retirement, paying down debt, or simply getting ahead financially. Here are some helpful tips from 1st CCU that can get your budgeting muscles in shape! Clarity: Analyzing where your money goes without bias can reveal areas for improvement, like cutting unnecessary spending on dining out and subscription services.

1. Make a List of Your Expenses

Budgeting is essential to financial security in any situation or goal, no matter the circumstances. To create yours, first create an expense list including take-home income plus deductions such as health care premiums or retirement savings accounts. Once completed, identify fixed and variable expenses before estimating monthly spending totals.

Select a budgeting method (we suggest the 50/30/20 rule), compare your spending against its categories and set savings and debt paydown goals. Furthermore, review your budget on an ongoing basis, perhaps once per month or whenever a goal has been accomplished.

2. Set a Budget

Budgeting is a tool designed to help you better manage your money. It entails setting spending limits and monitoring spending habits to stay on the right path toward reaching financial goals, such as becoming debt-free or saving for a vacation.

Start by listing all of your regular monthly expenses, such as rent/mortgage payment, utilities bill payment, car loan payment, and groceries. Be sure to include entertainment or clothing purchases among this list as well. Now that you’ve compiled your expenses, it’s time to develop a budget. A spreadsheet, online budgeting tool, or mobile app may make this task simpler.

3. Track Your Spending

Once your budget is in place, it’s important to regularly review it against your spending. Doing this will keep you on track while also helping identify areas in which savings could be found.

Start tracking your spending with an online spreadsheet or budgeting app to gain a clear picture of where your expenses are coming from, such as $2 at the vending machine every day or $10 spent for lunch out three days per week, and discover opportunities to make adjustments and savings. Add any money you receive as gifts during the year—such as tax refunds or holiday presents—so that it can go toward savings or debt payoff.

4. Cut Unnecessary Spending

If your expenses exceed your income, it may be time to cut spending on unnecessary items. There are various strategies for doing this, from shopping around for better insurance rates and clipping coupons to using coin savers or savings apps—these measures will help make unnecessary purchases less likely while helping build savings over time.

Reduce spending with “pay yourself first.” Set up an automatic transfer from your checking to savings every week or month and put aside part of your paycheck before spending any of it on anything else.

5. Create a Savings Account

Savings accounts provide an ideal place to stash away funds you don’t plan on spending immediately. They usually earn interest and don’t link directly with debit cards, making it harder for you to spend the cash quickly.

Start by tracking all your expenses for several weeks using an app on your phone, a budgeting spreadsheet, or pen and paper. After categorizing expenses as needs versus wants, set aside a percentage of each paycheck toward savings for each pay period; financial experts generally suggest setting aside enough money for three to six months’ worth of expenses in savings.

6. Set a Spending Limit

One popular budgeting approach involves allocating portions of your income toward necessities like groceries and utilities, as well as entertainment and travel—for instance, allocating 50% for needs and 30% for wants.

One option is using envelope budgeting, in which each category on your spending plan receives its envelope. This method encourages greater discipline and prevents impulse spending; plus, it requires tracking purchases using an app like Actual Budget, which keeps you on track with your financial goals.

7. Fill an Envelope

No two months are the same, so your budget needs to be flexible. Take a glance at your calendar at the start of each month in order to identify seasonal expenses or irregular bills that could alter it and affect it negatively.

Having difficulty sticking with your budget? Switch to using cash instead of credit cards for easier tracking of where your money goes and can help prevent overspending. If that fails, finding an accountability partner who will cheerlead and hold you to your budget goals might also help keep you on the right path.

8. Create a Savings Account for Emergencies

An emergency savings account can provide much-needed peace of mind during unexpected expenses. It is generally advised that enough savings be set aside for three to six months’ of living expenses. Though saving this much money may seem intimidating, setting a goal and working toward it will make the process simpler. Budgeting apps such as Union Bank’s MyFi 360 provide 24/7 access to your finances and allow you to track progress toward meeting savings targets.

Look out for opportunities to increase your savings, such as tax refunds or cash gifts like birthday and holiday presents. And please keep in mind your change—rather than stuffing it into sofa cushions, put it into an actual change saver or coin sleeves instead.

9. Create a Spending Limit

Bills and utilities include things such as water, electricity, trash services, and other necessities. Setting a spending limit in this category helps you reach other financial goals without jeopardizing credit card balances or overdrawing checking accounts. You may also find it useful to monitor your spending with a budgeting app.

This approach works best for those who can keep meticulous records. By creating a budget for all of your expenses and allotting a percentage of income to each category, you can compare them against national averages to find places you can reduce spending.