By: Amy Barnes
Assistant Vice President
Ever been excited to find an extra $5 in your pocket?
That’s the kind of feeling you can get by making and following a budget. Why? Because you’ll discover money you didn’t realize you had — and then be able to save it!
As part of our Dave Ramsey financial planning, we recommend Dave’s “zero-based budget,” which means telling every dollar where it should go before your month begins. Use this form to get started.
Here’s how to create a budget:
- Write down your total income. This is your after-tax take home pay, including everything from full-time jobs, side hustles, Social Security checks or any other income.
- List your expenses. Total all your costs — from gas, groceries and subscriptions to bills like your mortgage and electricity. Don’t forget irregular bills, such as quarterly insurance payments or seasonal expenses.
- Subtract your expenses from your income to get to a zero base. This doesn’t mean you don’t have anything in your bank account at the end of the month — it just means you have zero dollars left over in your budget. You know where every dollar is going.
- Have money left over? You’ll need to work on your budget until you get there, allocating more to debts to help pay them off sooner, according to your Debt Snowball Plan. If you don’t have any debts, it’s time to starting building your savings and wealth. (If you need help figuring out where to start, give me a call.)
- Don’t have enough money to cover your monthly expenses? Start with your four walls: basic necessities like housing, food, medical and transportation. Then look for ways to cut out unnecessary spending – and yes, your Grande Pumpkin Spice Latte is unnecessary! If debt is taking over, you should set up a Debt Snowball. You also may need to consider boosting your income with a side hustle/part-time job to help out.
- Track your spending. This last step may be the most difficult but is the only way to know that your budget is on track with your life.
Please email Amy Barnes to schedule an appointment or call her at 217-679-1676.
Having a hard time with that last step? Here are some easy ways to keep you on track with your spending and savings goals as you begin to follow a budgeting plan:
- Keep it simple and in front of you. Put your budget plan somewhere prominent, such as an app on the home screen of your smartphone or a big paper sheet on your fridge door (you’ll see it when you open it every day!)
- Be realistic. If cutting a lot of expenses seems overwhelming, try one area at a time so you can see progress immediately. Budgeting is like an overall healthy lifestyle — you want the extra weight to come off slowly but surely and be a long-term change.
- Revisit your budget in detail at least once a month – or even better, every payday. This will confirm that you are following your outlined plan and staying within your spending limits. It will also allow you to see any patterns that might be throwing your budget off, or any expenses that you might have originally forgotten to account for.
- Lastly, the most fun part – and best kind of incentive for following a budget – is to watch your savings grow! The best part about sticking to a budget is seeing the fruits of your efforts, in the form of more money staying in instead of going out!
Looking for help in creating a budget? Contact me today!