Establishing a responsible budget is the first step toward a healthy financial lifestyle. You may already plan a few expenses here and there, but the smartest way to ensure you’re making the most of your money is by following a budget that’s based on your specific income and day-to-day needs.
If you’ve never attempted to make a budget before, it might seem overwhelming. Here’s a step-by-step guide to help set you up for financial success.
1. Start with your net income.
No bells and whistles here. After taxes, what are you working with each month? That’s where your budget will begin.
2. Recognize your regular expenses.
Be sure to include everything. Overlooking the Netflix bill or underestimating how much you pay in electricity each month can throw a kink in your plan to become a lean, mean financial machine.
3. Set a savings goal.
It’s always best to treat saving as an expense. The rush of payday often leads to impulse purchases.
4. Be realistic.
Recognizing how much you should be saving or spending in certain areas will save you a headache down the line.
5. Track your spending.
Whether you use a spreadsheet or keep things old-school with pen and paper, it’s essential to know how much you’re spending in each area of your budget.
Crafting a budget is only half the battle. The hard work comes in sticking to your plan no matter what. The benefits will come in the long run. And although this may sound like a lecture from your cheap dad, well, sometimes dad knows what he’s talking about. Unlike your dad, we’re not upset you didn’t make the varsity basketball team. The coach was totally playing favorites.
Abbe Poline is branch manager, lending vice president at Renasant Bank
