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Budgeting is a scary word. Few people really want to know how much they are spending and like dieting, budgeting sounds like you are depriving yourself of something. Budgeting isn’t a bad thing! And actually it can be fairly simple to set up a budget.
Where do you want to be in a year, ten years, at retirement? Why are you creating a budget? It might help if you wrote down a few goals so you know what you are workings towards whether it is saving more, spending less, or that dream vacation. At this point don’t worry about how unrealistic the goal is – just get it on paper. Later once you have a budget in place; remind yourself often what you are working towards.
Find a way that works for you – this could be an envelope for receipts or by using Money Manager. Write everything down and categorize spending by the type of expense (entertainment, groceries, gas, etc.).
Remember even that $1 in the vending machine counts. You might be surprised how quickly the little dribblers add up - $1 a day for soda is over $360 a year!
What are you really making after taxes and other deductions?
Where are your spending weaknesses? Are you spending more than you are bringing in? Now it’s time to actually create a plan. Look at your type of expenses – figure out how much you need to budget for basic things like utilities, bills, gasoline, groceries, etc. How much is left over to save or spend on entertainment and extras?
If your expenses are more than your income or if you are just looking to increase your savings, you will need to cut back. What can you get rid of – premium cable channels, subscriptions to magazines or movie services? Look at your spending honestly and look for leaks or extras you just don’t need.
Just like a diet, you can’t deprive yourself of everything or you will never stick with it. Budget a small amount of money for fun extras. It may be helpful to actually pay yourself in cash so when the money is gone – it’s gone. Use this money for fun extras like a coffee on the way to work, or a night out with friends.
You should make a category in your budget to pay yourself. Even if you start with setting aside $10 a month – it’s something. You also need to budget money for emergencies, such as car repairs, unexpected bills, etc.
Payroll deduction could be a great way to start saving. You set up how much and to which account. Some financial institutions also offer an automatic transfer from one account to another – so if your money is direct deposited into your checking set up a reoccurring transfer of a certain amount of money to your savings. You can always adjust the amount later if you find you can save more or less.
Your situation will change constantly – your income may increase or decrease, expenses may fluctuate, or maybe you paid off that credit card debt. Adjust your budget accordingly.
Since 1940 our goal remains the same; to help Dominion Energy employees save more and reach their goals faster. From checking and mobile banking, to low interest auto loans and surcharge-free ATMs, we make banking easy.