Whether you have lived on your own for a long time, or you are just starting out in your first place, having a budget in place is essential. A budget ensures that all the necessities are paid for on time. Plus, it gives you money for additional things like entertainment, vacations and other fun stuff. If you don't already have a budget in place, here's how to get started.
All income must be accounted for. Obviously, your paycheck or monthly retirement, pension or other income should be listed. If you have royalties, investment income, child support, alimony or other payments, list those too. You may have other sources of income that aren't discussed here. All of those should be accounted for. However, if you have uneven income, such as that from online sales or freelance projects, you might want to leave those payments out. Those items can be unpredictable and it's not wise to count on them, as they can disrupt your budget if they don't come through.
Now it's time to list your bills. Account for the most important items first. Your rent or mortgage should be at the top of the list. If this is not paid, you lose the roof over your head and worrying about the rest of the bills on your list is futile. Next up is utilities. Electricity, water, gas, sewer and all the other things that make your home livable should be listed. You should also realize that these expenses are usually variable. Some people average their utility costs over the year and use this number in their budget. Others prefer to use the highest bill amount that they've paid over the last year. It's always best to err on the side of caution, so you may choose to use the highest cost. Also, don’t forget about annual or semi-annual expenses like insurance payments. It’s best to set aside money each month so you will have the money on hand when these bills come due.
This is another important thing to budget for. The costs of food are skyrocketing, so leave a little extra room in your budget here. Think of ways that you can save on the things you need to feed yourself and your family. Coupons, gardening, farmers markets and food co-ops are great ways to stretch your food budget each month.
Depending on where you live, you probably have to have a vehicle. Account for the cost of the vehicle, as in loan or lease payment. Insurance, fuel, maintenance and repairs should also be budgeted for each month. If you use public transportation, put those costs in your budget.
Loans and Credit Cards
Many Americans have loans and credit card debt. Again, these payments may vary each month. It can be helpful to use the average payment here. This will ensure that you budget enough to keep your creditors happy and take good care of your credit score. And as we have discussed before in previous articles, your credit score can mean the difference between getting the things you want and need, or leaving the bank or credit union in disappointment.
Finally, budget for fun things. Entertainment, dining out, shopping or whatever makes you happy should be included in your budget. If all you do is work and pay bills, you will get burned out quickly and give up your good spending habits. Budget for fun things and you will be more willing to keep spending wisely.
If you find that there's not enough money to meet your obligations each month, it's time to ask for help. We offer a wealth of online resources and access to personal financial counselors through our Balance Financial Fitness Program accessible via the following link: https://www.communityfirstfl.org/personal-banking/account-benefits/financial-education/balance-financial-fitness-program. You can also schedule an appointment with a financial professional at Community First and let us help you with your budget. There are a lot of options out there that can help you stretch your paycheck and get the things you need. Call (904) 354-8537 today and let us help you take control of your finances.