Budget More Freedom Into Your Life

Choosing to stick to a budget may seem like adding restrictions to your life. Maybe you’re already living paycheck to paycheck and feel you can’t afford to think ahead of today, or perhaps you’re comfortable and don’t need to think too much about where every dollar goes. But wherever you are in your financial life, creating a detailed budget can actually give you more freedom in the long term.

If you want to save up emergency money, take fun vacations, or buy that big-ticket item you’ve had your eye on, finding out how much money you really have and where it goes when it leaves your checking account is essential. Let’s look at a breakdown of the basic steps:

1. Find out exactly how much money you have to work with each month. This would include all sources of income.
2. Find out where your money is going. Download your credit card and debit card statements or look at receipts to see where and what you are spending your money on.
3. See where your spending weaknesses are and address those weaknesses. Do you spend a lot of money on fast food? Maybe it would help to create a meal plan. Do you overspend on clothing? Consider cheaper options.
4. Reallocate funds from what’s less important to what’s more important. Paying down debt, credit cards, and bills is usually the most important place for your money to go, while spending money on fine dining or subscriptions may be less important.
5. Spend less than you earn. By setting aside money to go into savings each month, you can begin earning more then what you spend.

How to Get Started

• Establish your long-term goals. Do this using the SMART goal method. Consider making goals for each quarter, year, 5 years, and 10 years.
• Know your take-home pay. Your take-home pay is essentially what you are left with after taxes, life insurance, and other costs are taken out of your income.
• Collect monthly receipts of all your expenses. This includes anything as small as a quick coffee, to a large dinner to gas for a road trip.
• Factor in regular, periodic expenses like insurance.
• Write down or record every expense, no matter how small.
• Be realistic with goals. Don’t set goals that leave you with no money for groceries or other things you need.
• Set up automatic savings from you paycheck or another way, but ensure that a small percentage of your income is being put directly into savings where you will not be as tempted to spend it.
• Adjust your plan as needed.

Common Goals

Everyone has to try to budget their money at one point or another. Luckily, that means we can learn from others which goals are more helpful. Here is a list of common goals others have followed to help them build a better financial future for themselves:

• Reduce debt.
• Save for a down payment to buy a house.
• Pay down or pay off credit card debt.
• Make a major purchase (car, wedding, vacation, etc)
• Establish college savings.
• Build an emergency fund.

Common Ways To Save

Others have also made goals about how they can save more money to optimize their finances. Here are a few ideas that you could try implementing in order to save money and build a savings!

• Reduce entertainment savings.
• Cut down on eating out.
• Budget your vacations.
• Use coupons.
• Look for bargains on gas.
• Skip sodas and coffees when eating out. Tap water is free! 

Reducing Debt

Here are a few tactics others have used to help them reduce their debt:

• Pay off higher-interest credit cards first.
• Take advantage of balance-transfer offers if they have promo rates.
• Make a game of it by challenging family members to see who can save the most on regular expenses.
• Talk with the credit union staff for more ideas.

________________________________________________________________________________________

This article is for educational purposes only. WeStreet FCU makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.