Your First Quarter Financial Plan: Building a Budget
So far in our First Quarter Financial Plan we’ve identified our money weaknesses, chosen the right checking account and created a savings plan. Now it’s time to start putting all of these things into action by building a budget.
Budgeting doesn’t have to be a complicated process. Lincoln Savings Bank
wants to help make things as easy as possible, so here’s what to do: (note- this process can be used as a weekly, bi-weekly or monthly budget)
- Grab a pen and a sheet of paper. Draw a line down the middle. Label the left side “income” and the right side “expenses.”
- For the “income” side, write down any money you receive from paychecks, child support, structure settlements, donating plasma, etc. All income should be accounted for.
- For the “expenses” side, write down all of your expenses for the time period you’re budgeting for. Some may be fixed amounts while you may have to estimate with others. Include your savings amount you established in your savings plan, as this should be your first “expense” every paycheck.
- Total up your income and your expenses.
- If your expenses are higher than your income, you are losing money every month. You need to re-evaluate your expenses to find cuts.
- If your income is higher than your expenses, congratulations. However, you may also be leaving money in your checking account that is just sitting there. Could you maybe save a little more each month?
- If your income is barely exceeding your expenses, this isn’t necessarily a bad thing. If you are saving, it means you are doing a good job of managing your expenses while saving money.
It’s important to remember this question when looking at cutting expenses: Do I really need that item? Buying only what you need when it comes to food, clothing and other goods can really help shrink a budget. We’ll have more about that in our next blog post about common “money wasters” so be sure to watch for that later this week.
Lincoln Savings Bank, member FDIC