With the new year in full swing, have you considered what your financial goals are this year? One of the most efficient ways to make and stick to your goal is by creating a budget. Whether you have a budget created and want to learn ways to improve it
or you’ve never had a budget a day in your life, keep reading to learn more about how to create and stick to a budget and start making your financial dreams a reality.
2023 can be your year to achieve financial health.
What is a budget?
Before diving into suggestions on how to follow your budget, first let’s define what exactly a budget is. Put simply, a budget is a financial plan designed to measure and guide your income and expenses.
Creating a budget in four easy steps
Creating a budget doesn’t have to be complicated. In fact, it’s actually as simple as looking at how much money you bring in every month and what your bills are. Below is a breakdown of the steps to create your budget:
- Calculate your monthly pay after taxes
- Estimate your expenses for the week/month
- Set realistic goals, such as paying expenses and paying off debt
- Track your spending to look for patterns
Sticking to your budget
Once you have your budget established, it’s important to make sure you stick to it. This can look different for different people, and that’s ok! Below are some ideas and tips that may help you stay on track with your budget.
- Keep a finance journal: Writing in a journal is one of the most common ways to track spending. Doing so can make it easier to hold yourself accountable, and it’s a great way to look for spending patterns and decide what you should keep the same. You can also write out your short- and long-term goals!
- Consider an app: In today’s digital world, there is an app for practically everything. Like keeping a journal, using a finance app can be a great way to track your spending and stick to your budget. With Advia, we offer budgeting tools right in our Digital Banking platform. Some additional examples of budgeting apps for your smartphone include Mint, Googlebudget, and PocketGuard.
- Spend within your limits: This one may seem obvious, but it’s easier said than done for many – Only spend money you have. A major part of sticking to a budget is understanding what can be spent and what should be set aside, whether to go into savings, toward debt, or for a bill later that month.
- Pay yourself first: Many people make the mistake when budgeting of spending every penny, but have you considered budgeting to include a savings goal? If you were to set aside $25 a week, for example, that would be over $1,000 in a year. There’s nothing wrong with budgeting to have fun and go out, but making sure you also have a savings is one the best things you can do for yourself.
- Think long term: It’s easy to spend money. Almost anywhere you go or any website you visit has advertisements, ready to accept your hard-earned funds. While it’s ok to treat yourself from time to time, it’s also important to develop discipline when trying to stick to a budget – and to get ahead of the curve a bit with savings.
The 50/30/20 rule:
Have you ever heard of the 50/30/20 method? This is a trending budgeting tool that many of our members have told us they utilize. This method calls for 50% of your monthly income going toward needs, 30% for wants, and 20% for savings and debt repayment.
We hope the above tips are beneficial for your financial journey! If you start making your budget a priority now, think about how far you could be in a year from now.