Many adults put off creating a monthly budget like it’s an annoying chore. Unfortunately, it’s often not until they are struggling to make ends meet that they finally appreciate the value of a well thought out budget. Help set your future self up for success and learn how to set up a personalized budget today.
How to Build Your Budget
Gather All of Your Financial Statements
Before you start planning your spending, you need all of the information about your spending habits. This means getting your bank statements, bills, and anything referencing how much money is going in and how much is going out all in one place. The better organized you keep these statements, the easier budgeting becomes.
Want easy access to your bank statement online? Sign up for Union eStatements today.
Determine What Your Take Home Income Is
After taxes and contributions to health insurance and IRAs, what are you bringing home every month? This can be pretty cut and dry if you are a salaried employee with one regular paycheck. However, if you have a job that pays you hourly, or if you work multiple jobs, this can be more difficult.
If you have irregular income, a good way to figure out your monthly take home is to average out the last 6 to 12 months of recurring income after taxes and use that figure.
List Your Monthly Expenses
If you aren’t diligently keeping track of your monthly expenses, it can be easy for your spending to get out of hand. What are you spending money on? This includes regular, larger budget items like your mortgage, utilities, and car payments.
But you should also account for smaller spending habits, like your daily cup of coffee. It might not seem like an item that you need to account for, but if you’re buying it regularly the cost can really add up. Let’s say you’re only spending $1.50 on a cup of coffee every day, by the end of the year, you’ve spent almost $550 on coffee alone!
If you want to add a little to your budget and combat those extra items like your cup of copy, apply for a Union Cash Back checking account and earn back some of the money you spend.
Once you’ve determined how much money you have access to every month and how much you’re spending on average, the next step is to prioritize your expenses. A simple way to do this is by separating your expenses using the 50/30/20 budget. This is a financial planning system that breaks your budget into three categories. Each category gets a specific percentage of your available income.
These are the items that are absolute necessities. It includes housing, food, transportation costs, and utility bills.
Savings and Debt: 20%
Whenever you plan a budget, it’s important to remember to account for your savings and debt repayment. Many people forget about savings and debt when budgeting, which can quickly throw things off balance right away. Think of this part of your budget that is essentially you paying your future self. It should include things like creating an emergency fund, paying off your loans, and contributing to retirement funds like an IRA.
Personal Spending: 30%
This is the section everything else falls into. It’s the items you may want but don’t necessarily need. It includes things like your cell phone plan, dining out, or your Netflix subscription.
Want to learn more about how to create a 50/30/20 Budget? See how much of your paycheck you should be saving.
Set Up Automatic Payments
A great way to keep your budget on track and ensure that your money is going to the right places is to set up automatic withdrawals for your bills. This can be done with many different monthly bills including:
- Car payments
- Mortgage payments
- Gym membership
- Student loans
Review and Adjust
An important step that many people miss is to review how your budget went at the end of the month. Did you meet your goals? Were there unexpected expenses? If you find any areas where you spent more or less than expected, factor that into next month’s budget. This step will keep your budget on track for long term success.
Manage Your Budget With Union
Want to keep better track of your money? Union Community Bank’s mobile app is a great way to manage your money on-the-go. Download the app for a variety of services including:
- Check account balances and search recent transactions
- Transfer cash between accounts
- Pay pre-established bills
- Deposit checks on the go and view processed checks
- Find branches and ATMs