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Budgeting in 4 Easy Steps

budget

No matter your financial situation in life, everyone needs a budget. With a budget, you can plan for needed expenses and prepare for the things you want!

In fact, the most simple budget only needs a couple of lists, a calculator, and some goals. Below are the main points our post will go over to help you set up your budget:

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Budgets are an important tool in anyone’s financial arsenal. Budgets can help you organize your needed expenses, like rent and bills, prepare for emergencies and get ready for whatever your future might hold. By knowing how to budget you can learn to stop living paycheck to paycheck and start building up your savings. it can help you save up for big expenses or future life events like a wedding, starting a family, buying a car or a house or moving to a new state.

Budgeting can also help you save for retirement, something else that even younger people just starting out on their own sometimes forget to think about but should. But most of all it can grant you financial power and freedom and help you provide for your wants and needs. But for those just starting out on their own especially, it can be hard to know where to begin.

There are several key elements you’ll need to include in your budget. You need to think about all your necessary expenses and plan them out accordingly so you are aware of how much of your monthly income you need to spend each month no matter what. Then you’ll have to think about unnecessary expenses. This is where you have the most freedom to plan out the numbers and make adjustments.

budget-template

How to Budget

There are many ways to budget and there is a lot of advice out there in the financial spheres about how to do it. You can also choose to plan for certain events by making a specific wedding budget, or for major purchases like car payments. But if you’re making a simple budget for yourself, then the main thing you’ll want to decide first is whether you want to make a monthly or yearly budget. Most people like to create a yearly one to get a general big picture view of their financial goals and future plans. But, a monthly one is more helpful for everyday use. We’re going to try and condense all that down to the bare bones minimum of what every smart budget needs.

#1: List your monthly income

List out all your forms of income. This would include the paychecks from your job, but also any extra money you make from any of your side hustles. Here is also where you can decide whether you want to organize your finances for gross income or net income.

Gross income is simpler and easier to calculate. You just need to know how much you get paid and use that money for your calculations.

Net income isn’t as simple to figure out but there are advantages to using it. You figure out your net income by looking up what the income tax is in your state, and taking out that percentage from your gross income. Using net income instead of gross income is perhaps better because it more realistically reflects what you will actually receive from your paycheck.

#2: List your fixed expenses

After you have all your sources of income written down you’ll want to form another list for all your fixed expenses. Fixed expenses are the expenses you have each month that doesn’t fluctuate in amount. Everyone’s list is going to look different depending on what expenses do and don’t apply to you, but here is an example list of some fixed expenses:

  • Rent or Mortgage: A calculation you’ll want to do when looking at your housing expenses is to check that your total housing expenses aren’t over 28% of your monthly gross income.
  • Insurance
  • Debts: A calculation you’ll want to do when looking at your debts is to check that your total debts aren’t over 36% of your monthly gross income.
  • Loans
  • Student loans
  • Credit card payments
  • Streaming services like Netflix, Hulu, and Spotify
  • Phone bill
  • Medication you pay for each month
  • Child support
  • Education

After you’ve listed all your fixed expenses total the amount, subtract it from your monthly income, and that’s what you have left to spend on varied expenses . . .

#3: Set up your savings

Before we go into varied expenses though, let’s take a moment to think about your savings and retirement. Get a savings account if you don’t have one already, and set aside a portion of what’s leftover after fixed expenses. Any amount you can afford to put away into a savings account each month will set you up for success in the long term, even if it’s only 5 to 10 dollars a month.

Aside from general savings and saving for retirement, you also want to set money aside in an emergency fund. It’s recommended that you have at least 3 months’ worth of your fixed expenses put away into an emergency fund at all times.

Digit is a great app you can use to help you plan and organize all your savings.

#4: List and portion out your varied expenses

Everyone’s list of varied expenses is going to look different depending on what expenses do and don’t apply to you. Varied expenses are any expenses that are going to fluctuate in amount each month, or are considered more like luxury expenses than needed ones.

Varied expenses are a big reason to do a budget in the first place so that your varied expenses each month don’t overtake your more important fixed expenses and your savings. Here are some examples of varied expenses you might need to consider:

  • Groceries
  • Eating out
  • Entertainment
  • Gas and transportation
  • Recreation
  • Clothes
  • College textbooks

Another way to figure out the reality of what you’re spending on varied expenses is to look at your transaction history for the month and see 1) How much in total you were spending on varied expenses that month, and 2) What those varied expenses were on. Do this for a couple of months back to get a more realistic idea of what you are spending on varied expenses each month.

Organizing your varied expenses is where you have the most control over your budget. Whatever is left over after your fixed expenses and your monthly payments to your savings account is what you have to spend on all your other spending for the month.

Here is where you will list out what all those varied expenses might be and portion what you have left in the budget into them. Remember that you don’t necessarily want to portion out 100% of what’s left into these categories so that you can accumulate a comfortable cushion in not just your savings account but your checking account as well.

Budgeting Tips

Invest

Making investments is a great way to beef up your financial portfolio. There are probably a trillion ways to invest, but the idea behind investments is that you put money into something that will give you more money in return later. This is called compounding interest.

interest-rate

A helpful tip to remember when going into any investment is the rule of 72. This rule means that if you take 72 divided by the interest rate you’ll figure out the estimated number of years it will take for your interest to double your initial investment.

Personal Capital and Acorns are some of the most helpful investing apps you can use to step up your investment game.

Where should I put my budget?

Figuring out where to even put your budget can get complicated. You can use excel or make your own table in Word or Google Docs or any note-taking program of your choice. There are also many free budget templates online that you can print out and use. Budget tools are all around if you take the time to look and decide on which ones best suit your needs.

Click here for a free budget worksheet from the Federal Trade Commission.

You can also use budgeting apps to keep track of all your bills, expenses, plans, and goals. Some of these apps even allow you to connect your budget to your financial accounts.

Control your spending

Sometimes it can be difficult to control your varied expenses throughout the month and track your spending. You can make controlling how much you spend each month easier by using a prepaid debit card. With a prepaid debit card, you put money on it like a gift card to yourself almost. You can also use a similar method of spending control by just taking money out and only using that cash for your varied expenses each week.

PocketGuard is an app that can help you track your purchases.

Get a Side Gig

Getting an extra source of income can really come in handy. There are a million different kinds of side hustles any ambitious person these days can get into. You can babysit, drive for uber, or sell your own products. The possibilities are endless and it never hurts to have a little extra money each month.

Plan to Decrease Debts

Debt can be a real financial weight on your shoulders, but it can also be a necessary evil in order to get a house, get a car, get through college, and much more. Decreasing the amount of debts you owe can still help alleviate some of that weight and provide more financial comfort and peace of mind.

So it’s important to budget with paying down your debts in mind. You can pay down debts quicker by planning to spend more on that fixed/necessary expenses each month, by spending less on varied expenses, or by getting another job to provide more income to put into your debts each month.

Budgeting doesn’t have to be hard. All you really need is 4 lists and a calculator! Everyone should practice using a budget now so that you can control your finances instead of your finances controlling you.

READ MORE

Check out some of other Check City articles on budgeting:
Budgeting for Dummies

What is a Budget?

Budgeting Tips You May Not Have Thought of Before

3 Simple Tips to Building a Budget

Ways to Keep Track of Your Spending


Saving Money with an Emerging Family

family savings

Monthly bills, groceries, children’s clothing, auto repairs, and diapers all add up. Luckily there are ways to save as a new family.

Growing families will want to first make a budget as the first step to learning to save. However, even with a functioning budget, a growing family may want to take additional steps to save money each month. By practicing smart consuming, an emerging family can save a few more dollars on everyday items. By saving a few extra dollars here and there, a family can reach financial stability earlier, even amidst the fiscal pressures of a developing family.

Food Costs

food costs

Groceries are expensive and unfortunately, they seem to only be getting more expensive. Economic and agricultural issues are attributed to this consistent rise in food costs. Notwithstanding, groceries and food costs are one of the main priorities in a family’s monthly budget. To help a family in determining what food expenses should be expected from month to month, the United States Department of Agriculture has published a monthly report on the average food costs for a family who eats balanced and nutritional meals.

In this monthly report, a family of 4 that is moderate in their spending will spend $889.90 a month on groceries. The thriftiest of families will spend about $564.00 a month on groceries. With this in mind, it’s easy to see the importance of not overspending on food costs.

Ways to Save on Food Costs
  • Use coupons
  • Buy in bulk
  • Shop sales and discounts
  • Make a meal plan for each week
  • Plan your grocery trips
  • Avoid buying junk food

Using a small Check City Payday Loan can also be one way to make sure you have enough for groceries. Therefore, the first way to save a few extra dollars every month is to create sufficient meal plans and stick to them when purchasing groceries.

Utility Bills

utility bills

After food costs, the next most expensive monthly bills are utilities. You can save on your utility bill by decreasing the amount of water, heat, AC, or electricity you use. By decreasing this expenditure, a family can save potentially hundreds of dollars every month.

Ways to Save on Utility Bills
  • Use less AC in summer
  • Use less heat in the winter
  • Time your showers
  • Take showers instead of baths
  • Open windows instead of turning on lights

To save even more money and be more cost effective in utility spending, consider hiring an energy company professional. They’ll perform an energy audit on your home. An energy audit will find ways for your home specifically to save money on energy and optimize your energy usage.

Auto Repairs

car repair

Auto repairs are typically an expense that young families are hesitant to pay due to the fact that it will severely impact their budget. Other needs, such as paying the electric bill or buying diapers for the baby, take precedence over fixing the car. This is how necessary repairs to a vehicle get put off.

Instead of delaying vehicle repairs consider using a payday loan from Check City to help pay for the repair costs. Payday loans from Check City are a small and safe loan that can give your family just the boost they need to pay for car repairs when an auto accident tips the budget.

Using Networks

community

Networking with friends and extended family members is another way to help mitigate the costs of a young family. Family and friends can help each other by setting up a support system. This support system can then help families all save money! You can trade services like babysitting, lawn care, and carpooling. That way you’ll all have a little less to pay for each month.

Smart Shopping

family plans

Lastly, a young family can save more money annually by putting extra thought into all of their major purchases. Sometimes your family is going to need to make larger purchases, like a personal home computer or laptop. But with a little extra research you can compare prices, brands, quality, and sales to make sure the family is getting the most for their dollar.



Plan out all your expenses, including major expenses and potential unexpected expenses that could surprise you in the future. Along with planning all your expenses, use your connections to create a solid network of support and resources you can lean on. By doing all this a young family can save money each month and reach financial stability sooner.

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