1. Calculate Income
The first step in creating a budget is understanding how much money you have coming in. Be sure to calculate your income after taxes and paycheck deductions.
2. Outline Expenses
Make a detailed list of all fixed and variable expenses. It is important to remember to include annual and quarterly expenses (taxes, vehicle registration, donations, etc.).
One popular budgeting method is the 50/30/20 rule. The rule says that you should allocate 50%, 30%, and 20% of your income to the following categories:
- Debt payments
Personal Expenses: 30%
- Dining out
- Date night
- Shopping for non-essential items
3. Set Savings Goals
With the 50/30/20 rule, 20% of your income is allocated to savings. Consider where you want to be financially in the next 6 months, 1 year, 5 years. Realistic, achievable goals will keep you motivated towards the big picture. Take a look at these examples to help you get started:
Short-term financial goals
- Pay off Debt (student loans, credit cards)
- Establish Emergency Fund (3-6 months of expenses)
- Home Improvements
Long-term financial goals
- Retirement Savings
- Pay off Mortgage
4. Daily Monitoring
To make a budget successful you must stick to it. By reviewing spending activity daily (or at least weekly) it is easier to stay on track. Online Banking is packed with budget features to help you categorize your transactions to track your spending and stay on budget.
5. Ask for help!
Wherever you are on your financial journey, we have tools like our financial calculators and experts that are available to help you along the way. Our team is dedicated to offering the best in customer service, plus, you can call or chat with us anytime, day or night! So, don’t hesitate to give us a call at 616.559.7000 or stop by your local branch.