Online Banking
Category: Financial Wellness

6 Steps for Creating a Monthly Budget

Knowing how much you make and how much you can spare is all about taking control of your money.

If you want to stop living paycheck to paycheck, take control. Here’s how you can:

  1. Change your mindset — Rather than thinking of a budget as a drastic monetary diet, see your spending plan as a way to buy your financial freedom.
  2. Compare income to expenses — First, add up your take-home pay (after deductions and taxes) without including bonuses or tax refunds. Next, track all expenses, no matter how small, including money set aside for charitable giving. Keep this up for at least a month so that you can get a reliable view of your fixed and variable expenses. Place each of your expenses into one of three columns: Fixed (necessary, month-to-month bills like mortgage or rent), Flexible (varying monthly bills like utilities) and Discretionary (dining out, entertainment).
  3. Use tools and technology — Plenty of high-tech and low-tech tools can also help you learn how to budget. For instance, Regions’ budget calculator can help you categorize and track spending for budgeting purposes. Additional online budgeting tools are available from Regions, Quicken®, QuickBooks™, and Mint®.
  4. Decide what you really want — Once you have a budget in place, set short-term or long-term priorities for unnecessary purchases like a vacation or concert tickets. This can help you avoid impulse spending. If there are just too many options to choose from, try to think strategically. List the pros and cons of prioritizing each goal or ask friends and family to vote on what they think you should move to the top of the list. Remember, if you cut out all the fun, your budget will be as hard to adhere to as a strict diet. So leave yourself some financial flexibility.
  5. Pinch pennies — If your expenses exceed your income, look for opportunities to start paring back, such as making your own coffee and packing a lunch; buying generic products over brand names; dropping premium cable channels; going out to eat less frequently; or borrowing outfits from friends or shopping at thrift stores rather than refreshing your wardrobe at the mall.
  6. Switch your budget to auto pilot — Set up direct deposit for your paychecks, with percentages funneled to savings and bill payment accounts to keep funds off-limits. Automatic billing can also help you avoid late payment fees.

Source: regions.com