Blog Posts

  1. blog post teaser image

    Resolve to Budget in the New Year

    Yes, they are clichéd. But New Year’s resolutions are also legitimate tools you can use to identify what matters to you and to achieve some important financial goals.

    The new year is a wonderful time to re-evaluate your life goals and determine how they may be achieved, whether you want to get in better shape, spend more time with your family or develop a strategy for taking control of your finances and planning for a sound financial future.

    Not only is taking control of your money often easier than you think, but you might be surprised what you learn in the process. Many people discover they spend far more than they realize, without having much to show for it or even knowing where that money went.

    The process of creating a budget allows you to see where you may be carelessly losing money, where you can cut costs and what you need to do in order to achieve future goals. So, in honor of 2017, here are our top ten tips for creating a budget.
     
    1. Gather your tools. In order to craft a realistic budget, you will need:
      • Paystubs or tax returns that show your income
      • Credit and debit card statements
      • A list of expenses
      • A calculator
    2. Calculate your monthly income. This may be as simple as looking at your paycheck stub and making note of your take-home pay. But if you are self-employed, add your net earnings from the past year and divide by 12.
    3. Add in any irregular income, such as bonuses, commissions, dividends, rental income and royalties. If you receive quarterly or yearly amounts, average them out to get a monthly estimate.
    4. Create a list of necessary expenses — the bills you must pay each month:
      • Rent or mortgage
      • Auto and home insurance
      • Health care costs
      • Payments on student loans, credit cards and other debt
      • Utilities
      • Gasoline
      • Groceries
    5. List your discretionary expenses, such as dining out, entertainment, vacations and gifts. A personal financial management tool makes it really easy, but if you don't have one, use your credit and debit card statements to get an accurate idea of your spending. Add it all up and divide by 12 to get a monthly average.
    6. Add up your monthly fixed and discretionary expenses, and compare the total to your income. If you spend more than you earn, you'll need to make some changes. If you earn more than you spend, you are off to a great start. Now it's time to budget your savings.
    7. Cut your discretionary expenses. If you spend more than you earn, your discretionary costs should be the first things you cut. It's fairly easy to pack a lunch to bring into work instead of eating out every day. 
    8. Trim fixed expenses. Fixed costs are more difficult to cut, but doing so may save significant money. For example, you might ask for a re-assessment of your home value if you think your property taxes are too high, or negotiate a better deal on your cable TV package. It never hurts to ask, and it may save you hundreds of dollars over time.
    9. Set savings priorities. Once your income is higher than your expenses, set your goals. A short-term priority might be a vacation or an emergency fund. A mid-term goal could be saving for college, and a long-term goal could include saving for retirement. Set up separate savings accounts for each goal.
    10. Don't be discouraged if you occasionally fall short of your goals. Maintaining a budget takes patience and practice. But it comes with a payoff that is not only evident within your bank account.
    Successful budgeting can produce a feeling of accomplishment when you set goals and stick to them, and when you can spend your own money on things that are important to you. Ultimately, you may also be rewarded with the peace that comes when you are financially prepared to handle whatever life throws your way. Happy New Year!
    Posted: December 28, 2016 by Delta Community
    Filed under: budget