A personal budget is a financial plan that allocates your income towards expenses, savings and debt repayment each month.
When you follow a budget, you track all sources of income and categorize your expenses to ensure you are living within your means and working towards your financial goals.
Everyone could use a few ideas to save money and spend smarter, no matter where you’re at in your financial journey. Creating and adhering to a personal budget can benefit you in several ways, including:
If you've struggled with sticking to a budget in the past, these simple budgeting tips will help you enhance your savings while still allowing you the freedom to enjoy your life.
Starting a budget can feel like a monumental task. There are numerous expenses to keep track of - many of those easily forgotten. To start the process, begin listing all of your regular expenses that you can think of.
The monthly expenses that you must pay can be used to create a dynamic household budget. The required monthly expenses include groceries, insurance, rent, mortgage and utilities.
Some common additional expenses include car payments and loans. You can include recurring, non-essential expenses as well. These expenses include subscription services, which typically renew monthly, quarterly or yearly.
After establishing your expenses, create a table or spreadsheet. Review the previous three months of recurring transactions to track income and expenses.
This will let you gauge your current spending habits, as well as estimate the set future recurring costs. Having accurate information on your previous expenditures will give you the most insight into how to plan and how to spend.
Budgeting is essential for good financial planning. We can anticipate and plan for several regular expenses. The aforementioned household budget handles the recurring expenses, which are typically the same or similar amounts each payment period. You can add other items to this budget or make categorized budgets for different types of expenses.
A common separation among budgets is fixed expenses and expenses that are discretionary. Fixed expenses are the items that are included in the household budget, such as rent, groceries, or a car payment.
These are expenses that you are likely not able to change very easily. Discretionary expenses are optional or recreational costs. These are not necessary costs, but they are common for any non-essential activities that you spend money on.
To budget mindfully, the discretionary expenses should not exceed the fixed expenses. A good practice to follow is the 50/30/20 Rule. This Rule applies to your after-tax income.
50% of your income should be used for essential, fixed expenses. 30% of your income is used for non-essential spending and expenses. The last 20% of income is put into savings, like an emergency fund or retirement contributions. Our budget calculator can show you how to apply this savings rule to your finances.
This is a quick and easy method to organize and manage spending. If these amounts aren't feasible, adjust the percentages to create a custom budget. The end of the year is a great time to run through your financial checklist and reassess your financial future.
A budget is not a worksheet that is filled out and forgotten about. A budget should be kept up-to-date with ever-changing expenditures and transactions should be monitored over the course of the month.
Unforeseen expenses or variations in spending can cause you to go over budget. Similarly, under-spending for the month could offer additional funds towards a savings goal, so keeping track of your income and purchases is essential.
There are several online tools that can be used for managing, updating or monitoring expenses. Keeping accurate records allows you to make adjustments to the budget as needed. Review the Seacoast Bank End-of-the-Year Financial Checklist to make sure you're on track for next year. Financial planning is a continuous process and staying proactive is the best approach to saving effectively.
An easy way of saving money is by utilizing a savings account's greatest feature: automated transfers. Money you can't see or touch is much harder to spend, and savings accounts do not typically have fund access through debit cards or check-writing.
Automatic transfers allow you to select the portion of your income you would like to send to savings. Once this is determined, funds will be deposited into your savings account each month.
The Seacoast Sail Into Savings account automatically transfers $1 from your checking account to the savings account each time you make a debit car purchase. The account earns interest and has no minimum balance requirement, making saving money simpler and easier than ever.
Your savings, regardless of the amount, can become a fixed expense in your budget through automatic transfers or consistent contributions. This will offer a more structural approach to using a budget.
Creating a personal budget and monitoring your finances is the best way to maintain money-saving strategies. Next, let's take a look at some tips on how you can start utilizing your budget and saving money.
If you’re feeling overwhelmed managing your monthly budget, take some time to review your financial goals. You may have savings goals to achieve special milestones, likes buying a new car or purchasing your first house. Financial goals can be more general, like wanting to save a specific amount in a set amount of time.
If you are unable to meet your financial goals and manage monthly expenses, you can make adjustments to your goals. This gives you the opportunity to reprioritize your money and the way you want to spend it. By budgeting where you want each dollar to go, you’re in control and can make your money work towards those goals.
It’s easy to get overwhelmed by monthly bills, so when there’s an emergency, some of us tend to put the surprise expense on a credit card. If you keep an outstanding balance on credit cards, racking up debt each month can start to have a snowball effect.
Instead, keep your credit card debt to a minimum and build an emergency savings fund for situations that pop up (like needing a new set of tires or an expensive prescription).
It’s recommended that your housing costs stay under 30% of your income. If you’re looking for ways to save money, a lower house payment can make a big impact.
Consider renting out an extra room you’re not using or refinance your mortgage for a lower payment and interest rate. If you rent an apartment, find a roommate to take away some of the burden on utilities and rent payments.
The average American spends thousands of dollars on their car annually. If you live in an area with sufficient public transportation, you may consider going car-free.
Even if you use your car less, you’ll experience the benefits of saving on gas. See if you can find better insurance rates with a local insurance company or refinance your car for a lower loan payment.
Teach your children how to budget while you’re working on your own finances. Making kids a part of financial conversations teaches them responsibility with money and transparency about spending habits.
And if you’re in Florida, Seacoast Bank offers a Minor Savings Account to help them learn budgeting skills and become more familiar with the concept of savings.
Set aside time to plan out your budget and include anyone with anyone living with you. Use the information gathered from formulating a dynamic household budget.
When you make your roommates, partner, or whole family a part of the process, staying on budget is easier since it’s a team effort.
Reconsider your priorities and goals, then look at the areas that don’t serve those goals. Many people lose track of their membership subscriptions. Take some time to review active subscription services, cancel the ones you don't use, and put the extra cash in a savings account.
Some people find that using a cash system for spending helps them control it. Seeing and touching your money might create more intention around the way that you’re spending the money, which can make it easier to hold onto it longer.
Your next holiday doesn’t have to be extravagant to feel like a real escape. Find a quiet cabin for your next camping trip or make your vacation a staycation and rent an Airbnb nearby. There are easy ways to save when you travel, either by cutting costs on your lodging expenses or packing lunches instead of eating out.
If you want to save for your next vacation, there are plenty of ways you can cut costs ahead of time so you can focus on enjoying your vacation.
There are several great apps to help you see where your money is going. Seacoast Bank offers Online and Mobile Banking to help users track their spending, set goals for saving money and pay down their debt.
Our app also allows you to make quick, convenient transfers. You can also access your accounts and your financial goals through the app, giving you the resources needed to start banking smarter.
Saving is a form of investing in your future. You can set aside money each month to invest in an account that will grow your wealth over time. You’ll want to work with a bank that offers a diverse menu of investing options, from estate planning to 401k accounts.
Your Seacoast Bank team will help you understand your wealth and investment options and invest with confidence. Achieve your financial goals with the power to decide where your money goes.
Creating a personal budget isn’t just a smart move. It’s also empowering. Utilizing expert budgeting tips can help you save money, even during inflation. By planning out your budget and where your money goes, you’re ensuring a more successful, stable future.
Looking for more ways to spend money wisely and save for the future? Check out our personal savings options.
Topics: Manage Your Money
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