Budgeting 101: Getting Started

Ask anybody who knows about managing money, and the first question they’ll ask is, “Do you have a budget?” If you do not, here is a simple step-by-step guide to creating a budget:

Step 1: Get organized. Get an inexpensive notebook and calculator. Think cheap; you are working on your budget, after all. A spiral notebook is great, or you could our online banking budgeting tool.

Step 2: List your expenses. Gather up all your bills and make a list of your expenses. Round up to the nearest $10 to make the math easy. For  example, if your electric bill is $56.94, then write down $60. It’s better to estimate too high than too low. Following is a sample list of  expenses to get you started. The goal is to figure out how much money you need for your basic living expenses.

Step 3: Compare your income to your expenses. Now that you’ve listed your regular monthly expenses, compare this to your paycheck. The money that’s left is what you’ll need for unexpected expenses, home and car maintenance, clothing, gifts, and more.

Step 4: Track your expenses for a month. Now that you’ve got a list of what you think you spend every month, let’s compare it to reality. For an entire month, make a list of the money that you’re spending. Include everything, such as gas, snacks, alcohol, movie tickets, etc. Account for every single dollar. This also goes for your family. An easy way is to put a box on the kitchen table, and ask every member of your household to drop their receipts into the box.

Step 5: Revisit your expenses. Did your actual expenses surprise you? Update your list of monthly expenses from step 2. Now you really know how much you’re spending, and that’s a huge accomplishment. Feel good about your progress.

Step 6: What are your financial goals? What do you want to do with your money? Your money should be spent on things that are important to you. Should you cut back on certain expenses so that you have more money to save? Should you eat out less so you can spend time cooking at home with your family? Do you need to save for a family vacation or Christmas gifts—even if it means cutting off cable TV? The choice is yours.

Step 7: Cut back. Everyone can find some way to save money. Cutting back will give you more money for the things that really matter to you and will help you work toward your goals.

Step 8: Be prepared. It’s a sad fact that most Americans aren’t prepared for a big unexpected expense like a home or car repair or hospital bills. With your budget, figure out the amount of money you can save for emergencies. Ideally, you should have three to six months of living expenses, but any money will be helpful in a crisis. Do what you can today—even if it means spending less.

Step 9: Ask for support. It is always easier to reach your goals when you have others holding you accountable and cheering you on. Ask a family member or close friend to hold you accountable to sticking to your budget. And, never hesitate to stop into on our First United locations or to give us a call - We are here to support you and your financial well-being. We can answer your budget questions and help you discover ways to reach your financial goals.

Use our online banking budgeting tool to help you get started with your budget. It’s never too early or late to get organized and create a plan for success. Remember the old saying, “Count your pennies, and the dollars will take care of themselves!”