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How To Make A Budget

Personal Finances 4 min read

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The best way to save money and gain control over your finances is to make a budget. Follow these simple steps to make a budget that will save you money and bring you peace of mind about your spending.

Making a Budget

People often set their budgets according to a monthly schedule because most living expenses are based on monthly billing cycles. As such, it won’t hurt to spend one full month making your budget. That way you’ll come up with the most accurate data possible.

Record All Your Expenses

Keep track of everything you pay each month. This includes:

  • Rent/mortgage
  • Car payments
  • Car warranty
  • Utility bills
  • Student loans
  • Cell phone bill
  • Gas
  • Groceries
  • Insurance (car, health, or any other type)
  • Home warranty
  • Memberships to gyms or clubs
  • Charitable donations

Many of your monthly expenses are fixed amounts. But others, such as gas and groceries, will fluctuate from one month to the next. Round slightly up for these as it’s better to come up a little short of the intended number than to go over it.

Also, some payments such as car insurance might be quarterly or yearly. Figure out how much it equates to per month and factor the payment in that way.

Record Your Income

The next step is to tally up how much money you’re bringing in each month. If you have a job that pays hourly or by commission and each paycheck varies a little, round slightly down. It’s better to bring in a little more money than what you intended as opposed to coming up short.

Do the Math

Now that you know what’s going out and what’s coming in, do the math to determine how much is left over.

  • If the difference is positive (you’re making more than you spend):

Great! You have extra money that can be put in a savings account, vacation account, or to be used for fun spending money. Or, use it to chip away at those student loans or car payments. Remember, the faster you pay those off, the less you’ll spend in interest in the long run.

  • If the difference is negative (you’re spending more than you make):

You’re operating in debt and the sooner you can curb the momentum, the better. Examine your list of expenses and identify areas where you can trim some fat. For example, can you do away with the gym membership and get your exercise by running outside instead? Can you downgrade your cell phone, home internet or cable television plans? Is there a more affordable grocery store where you can shop or are there changes you can make to your diet that will impact your wallet?

Stick to Your Budget

There are many great ways to cut your spending without significantly changing your lifestyle.

Sticking to a budget can be difficult for many people, so figuring out a way to reward yourself for staying on task can help. If you have a First Bank personal checking account, the easy-to-use online MyMoney tool keeps track of everything for you in one spot. And the First Bank rewards program* is a great way to earn rewards for qualified purchases. This way, staying on budget doesn’t have to mean cutting out your favorite things.

Contact a First Bank Specialist Today

For additional help in creating a budget and getting on track to a healthy financial future, visit your local First Bank!

*Loans subject to credit approval. See our Terms and Conditions for complete details on our One Rewards Program. MasterCard, Debit MasterCard and the MasterCard brand marks are trademarks of MasterCard International Incorporated.

———

Source:

The Simple Dollar: http://www.thesimpledollar.com/trimming-the-fat-forty-ways-to-reduce-your-monthly-required-spending/

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