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7 Steps for Creating a Budget You Stick to

A budget is a great planning tool for examining your income and tracking your expenses. It provides a more careful focus on how your funds are spent. A strict budget will help you to develop a spending plan that stays within your income level.  A carefully planned budget can also help you reach your financial goals. Here are 7 steps for creating a budget you stick to.

1 Track your expenses

A good budget always begins with accurate tracking of expenses. You can track your expenses over the past year or so by analyzing your credit union or bank statements, as well as your credit card statements. Apps such as mint or YNAB are great tools for helping you track expenses. When selecting an app, always check the cost. For example, while Mint is a fee, YNAB and others have a cost for use. An expense tracker app can help you track all expenses that may be missed when just checking statements.

2 Identify areas for cutting back on spending

Obviously, many of your expenses are needs, such as food and housing. These are items that you can’t live without. Identifying areas where you may be overspending unnecessarily can have a big impact on your finances and may give you the ability to cut back. Once you track your spending over time and see where your money goes, you may be surprised.

3 Set your financial goals

What are your goals for budgeting? Your main goal may be simply living within your income level. Other goals may be saving for a new home, for retirement, or paying for your children’s education. Building an emergency savings fund should definitely be a goal. It can save you from blowing your budget on an unexpected emergency expense. Whatever your financial goals, a strict budget can help you achieve them. If savings is a goal, automate it by directly depositing part of each pay into savings accounts.

4 Evaluate your income

The number one rule of budgeting is that you cannot spend more money than you earn. Where does your income come from? Do you have one full-time job with a salary that never fluctuates? Do you have different forms of income that change on a monthly basis? You know what your expenses are. Is your income adequate to meet your monthly expenses as well as your savings goals? If not, you need to either cut your expenses or up your income. This may mean getting a side hustle to help make ends meet.

5 Allow a small percentage in your budget for discretionary spending

Your budget will not work if there isn’t a certain amount of flexibility built into it. You may face unexpected expenses some months or there may be something you really don’t want to deprive yourself of. Give yourself the flexibility to spend a bit more on occasion and make up for it in the following months.

6 Look for ways to balance your budget

In addition to adjusting your spending and increasing your income, are there other ways to balance your budget? Consolidating high-interest credit card debt with a low-rate balance transfer card or refinancing a high-rate loan may help you save. Check out Benchmark Federal Credit Union’s 0%* APR VISA Balance Transfer Credit Card.

7 Choose a budget app that works for you

The most important part of a budget is sticking to it. The expense and budgeting tracker apps we mentioned above, as well as others, such as Simplifi, Wally, and goodbudget, can help you stay on top of your finances. Evaluating various budgeting apps can help you find one that works best for you and your lifestyle. Automating through a budgeting app can help keep you accountable and stick to your budget.

Changing your financial habits won’t happen overnight. You need to commit to it and work at it. Your budget will fail if you have unrealistic expectations. You can’t spend more than you earn and magically balance a budget. Everyone, no matter their income level, should have some type of budget. Finally, remember as we mentioned before that for a budget to succeed, it must balance. If you’re spending more than you’re earning, your budget will never work. Circumstances change, so review your budget regularly. If you follow these steps, you should be able to create a sound budget that you can live with.


*APR = Annual Percentage Rate. Rate subject to change & based on an individual’s credit history. 0% Intro Rate is valid for purchases & balance transfer from other institutions for 365 days from card opening. The 0% rate will be in effect for up to 12 months from card opening & after 12 months the rate on all unpaid balances will convert to the rate member qualified for at card opening. 0% APR promotional rate is only valid on new VISA® Platinum Cards & subject to expire without prior notice.

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