What it takes to be a successful budgeter…
January is here and with the new year usually comes New Year’s resolutions—that don’t get accomplished. There are many “promises” that are made each New Year’s Eve that include weight loss, smoking cessation, saving money, or creating a more efficient budget. In fact, Suze Orman once said, “No one’s ever achieved financial fitness with a January resolution that’s abandoned by February.” At New Dimensions FCU, we agree and know that it takes commitment, determination, self-discipline, and a plan to achieve successful financial goals.
Financial goals can be achieved by having an effective budget! Here are the steps to successful budgeting.
- List monthly income- Start by listing your monthly income sources. The money you earn from paychecks, social security, rental income, gifts, bonuses, retirement, child support, or alimony. Then list your expenses- Separate your expenses into 5 categories. Fixed, the expenses that cost the same each month such as rent, car payments, or personal loans. Flexible, the expenses that vary from month to month such as groceries, gas, and utilities. Periodic, the expenses that occur only a few times a year such as water/sewer, car registrations, or property taxes. Personal, expenses for personal care such as toiletries, haircuts, gym memberships, or manicures/pedicures. And finally, a Miscellaneous category which are expenses that do not fit into one of the other categories.
- Determine where your money goes- There are several ways to track where your money is going such as online banking, a checkbook register, or phone/computer program apps such as Intuit, FinFit, YNAB (You Need A Budget) or another budget tracking app. Tracking your money is the best way to see where your money is going and to help identify any spending leaks. There are several examples to look for that may be busting your budget such as late fees, eating out, leaving lights on, throwing away food instead of storing it for future meals, and more.
- Balance income and expenses- Keeping your income and expenses balanced is key. When your income is greater than your expenses you can put the extra towards paying your debt down or help your savings account grow. If your expenses are greater than your income you have a couple of options. You can look at decreasing your expenses or increasing your income. Ways of decreasing your expenses include using credit wisely, using extra money to pay down debt, refinance to lower interest rates, bundling home and auto insurances, and canceling unnecessary expenses such as Audibles, Pandora, and other subscriptions.
- Review and communicate- Review and revise your budget annually and as needed. Experiencing a major life change such as marriage, a new baby, a new job or loss of a job means you should reevaluate your budget. And if you have a significant other, know that communication regarding finances is critical in order to achieve your goals.
As for the other resolutions mentioned above, we may not be able to help you with those but would be very interested in finding out about any fast and easy weight loss solutions you find. We look forward to working as your financial partner and hope that your financial future is one resolution we can stick to together. Contact us at (800) 326-6190 or email@example.com for assistance in creating an effective budget or to discuss your financial goals.