Build me up budget

Jul 02, 2021Building a Budget

If your relationship with your budget gets you down and up like the song “Build Me Up Buttercup,” you might need to rethink your strategy. We all know it is vital to have a budget, but sometimes, it is easier to give up the whole idea when it is not working. Budgeting is more like a blueprint; it guides you with your short and long-term financial goals, and it shows your spending patterns, which is vital to your overall financial health. When building a budget, it is important to keep in mind the “why” behind it to keep you motivated; it can be a new car, a vacation, or live debt-free. But before you start building a budget here are some steps you need to keep in mind.

• Be honest and know your actual income.

  Before creating a budget, it is crucial to know your actual take-home pay; after the deductions, such as taxes and medical. If you have an irregular income or work in a commission-based, you can use the least amount you receive when building a budget. Make sure to add any additional income you receive, such as interest or pensions.

• Categorize your expenses.

  When working with your expenses, you need to see which one falls under your needs and wants. Once you find out all your essentials, move on to the next category, such as debts or savings. It is also important to know if specific payments are fixed vs. variable. Your rent is an example of a fixed payment, and grocery bill varies month to month so the best way is to estimate and decide how much you would like to set aside with this type of expense. Another thing to keep in mind is expenses billed annually, such as auto registration, insurance premiums, or annual subscriptions. The easy way to fit annual expenses into your budget is to divide the cost by 12 to calculate how much they cost you every month. Holidays and back-to-school expenses can also be part of your annual expenses.

• Find a budgeting system that works for you.

  There are different budgeting systems you can use, and it can be simple as an old fashion pen and paper, envelope system, spreadsheet, or budgeting apps.  All you need is to find which one suits your needs and lifestyle.

• Track your spending.

  Tracking your expenses keep you from overspending. It also creates a record of your progress, and help you uncover unhealthy spending patterns, and to course-correct when necessary.

We all know that life can throw a curveball that can quickly derail your budget, especially if you have no emergency funds in place. Don’t be too hard on yourself; you need to refocus and use the situation as an opportunity to grow. And remember, Budgeting is a powerful tool in controlling your finances toward your goal. It is about freedom to spend without feeling guilty every time you swipe your card and it gives you the ability to enjoy life!

Do you need assistance in building a budget that fits your current situation? Speak with a Certified Financial Coach today to get you started!

Speak with a Coach

Mylene Leasure

Financial Education Coordinator | HAPO Community Credit Union