The Fundamentals of a Simple Budget in Five Easy Steps
July 03, 2023
F&M believes everyone should have a budget. Though creating and managing a budget can seem like an intimidating task, it doesn't have to be! With a simple budget, you can start to take control of your finances and set yourself up for financial success. Here are five easy steps to create a simple budget.
1) Know your Monthly Income
The first step is to know your monthly income. Calculate all the sources of income you have and make sure to include any extra sources such as child support or investments. If you’re self-employed, consider payments from clients and any other independent income sources. It’s important to be honest and realistic; if you overestimate your income, you won’t be able to create an accurate budget. Once you have all your sources of income in one place, it’s time to track your spending.
2) Track Your Spending
By tracking your spending, you’ll be able to gain insight into where your money is going, identify areas where you can save money, and make better decisions about where you want to allocate your funds.
There are many ways to track your spending. For example, you can use the F&M Bank mobile app, which will allow you to easily view your purchases, categorize them, and view a summary of where your money is going. You can also use a spreadsheet or pen and paper to keep track of your expenses.
When you’re tracking your spending, be sure to include all of your purchases, from groceries to rent to entertainment. It’s also important to note if the purchase was a one-time expense or a recurring cost.
3) Determine Your Financial Goals
List and prioritize your financial goals. When you have clear and achievable goals, you can create a budget that reflects your priorities.
Consider both short-term and long-term goals. Short-term goals may include saving for an upcoming vacation or reducing debt, while long-term goals might be saving for retirement or saving for a down payment on a house.
It's also important to set realistic and achievable goals so that you don't get discouraged. One strategy is to break larger goals into smaller ones so that you can gradually work towards achieving them.
4) Find Ways to Save Money
Saving money can sometimes seem like a difficult task, but with some dedication and organization you can find ways to make it happen. Here are some helpful tips to get you started.
- Cut back on eating out – Eating out is a huge expense that adds up quickly. Try to make a habit of cooking at home and bringing your lunch to work. This can help you save a lot of money in the long run.
- Make a shopping list – Before going grocery shopping, make a list of the items that you need to buy. This will help you stay organized and avoid buying impulse items.
- Utilize coupons – If you shop online or in-store, always look for coupons and discounts that you can use. Many stores offer digital coupons that you can apply during checkout, or if you're shopping in-store, look for store-specific coupons and discounts.
- Shop around for better deals – Don't settle for the first price that you see when shopping online. Compare prices and look for deals that are offered by different retailers.
- Set up a savings account with F&M – Setting up a separate savings account can help you stay organized with your finances and ensure that you are consistently putting money aside for the future. Also consider automating your savings so that a certain amount is transferred from your checking account each month.
5) Regularly Review Your Progress & Make Budget Adjustments as Needed
It’s important to regularly review your progress and evaluate how well you are staying within your budget. If you find yourself falling short in any area, don’t hesitate to make adjustments and create new budget categories as needed. Remember, creating a simple budget isn’t an exact science – it takes time, patience, and a willingness to be flexible so you can stay on track with your financial goals.
Reward yourself for staying the course. Think of ways to reward yourself for sticking to your budget or finding ways to save money.
Take Control of Your Finances
Creating and following a budget is essential for managing your finances. Even if you're not a financial expert, it's easy to create a simple budget that allows you to save for what's most important to you.
Inspired to start saving for all of life’s moments? Watch your savings grow along with generous interest rates in a F&M Bank savings account.
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