The monthly budget can get a bad rap. Detailed limits on where you can spend your hard-earned money? No, thank you. But what if budgets were a tool to help set you free from restrictions? What if a monthly budget put you in control – in the driver’s seat? What if you could reach not only your short-term needs, but your long-term goals at the same time? Budgets can help you do that.
Let’s explore how you can harness the power of your income with a monthly budget.
List Expenses and Calculate Income
First things first, let’s get it all on paper…or in a spreadsheet. Go through your spending history over the past few months and note your expenses. Then, calculate your household income. How much income is coming in on a monthly basis? Once you have these figures, you can start your budget.
Create Bucketed Categories
Next, group expenses together and assign them a category name. Maybe you will have a “Utilities” category that includes gas, water, and electric expenses. Or possibly a “Food” category that encompasses restaurant, coffee, and grocery costs.
Set Your Permissions
This is where you set some boundaries for each bucketed category. Assign each bucket a reasonable monetary amount to spend each month. The goal is to be sure your expenses come in at or below your household income. The lower your household expenses are, the more room you have for your longer-term goals like investing or saving.
Now, making a budget add up seamlessly has become increasingly more difficult with inflation. According to CNBC.com, 63% of Americans want to save more in 2023, but 77% say high prices could make it difficult. The economic landscape is not exactly helping. If you are finding it challenging to make your budget work, you are not alone. Finding ways to save has been a challenge for many Americans in 2023. Here are a few tips to try as you navigate through your budgeting journey:
- Meal Plan
- Buy in Bulk
- Save on Gas Through Grocery Programs
- Use Budget-Friendly Apps
- Try Couponing
Here are even more “inflation busters” to explore.
Determine Financial Goals
Now that you have your monthly budget covered, this is where you fly! Time to determine what is most important to you long-term. Do you want to travel? Save for college? Invest? Determine how much you will need for these goals and start working toward them month after month.
This is the gist of budgeting, but there are a many different styles to use. From zero-based budgets to the 50/30/20 method, you will surely find a budget that works perfectly for you. Take a look at a few more budgeting methods here.
Take Control of Your Financial Future
Bankers Life is here to help support your financial goals. Nailing down your monthly budget is the first step toward financial success. Keep the momentum and reach out to a financial representative with any questions you may have.
