Tips for Creating a Livable Budget and Deciding on the Best Savings Account for You
Creating and living within a budget is not an easy thing to do. In fact, 60% of American families live without a monthly working budget. There are certain steps you can take to develop a working budget to help you cut down on unnecessary spending and achieve your long-term financial goals. Before establishing a budget, however, it is important to open both a checking and savings account. A credit union or bank will be able to recommend the best savings account to suit your needs.
How to Create a Budget You Can Live With
1. Determine Your Net Income
Your budget should compare how much money you have coming in and how much you’re planning to spend. The first step is to determine your net income. Many people don’t take the time to calculate exactly how much they earn in a month. Rather, they tend to spend their paycheck as soon as it comes in.
Even before you start calculating your expenses, determine your net income. Consider your monthly salary (minus deductions) and any other sources of income you may have (such as investments, real estate, etc.). If your income fluctuates, try to calculate an average amount you can expect every month.
2. Categorize Your Spending
The next step is to determine how much you spend. Separate your expenses into discretionary and non-discretionary spending. Non-discretionary expenses are your essential bills, such as rent, mortgage and car payments, utility bills, and groceries.
Discretionary expenses are those you can adjust on a monthly basis (such as eating out, entertainment, clothing, etc.). Discretionary expenses are a useful area where you can save on costs. Be honest with yourself, and write everything down so you can determine where to make changes. If your expenses are more than your income, you may need to cut down on costs.
3. Reduce Your Debt
Debt is another expense that can eat away at your income. In fact, most families see 20% of their household income go to debt. Within your budget, make a plan to reduce credit card balances, loans and other debt expenses. A good place to start is to cut-down on discretionary spending, so you can redirect the money toward your debt payments.
4. Have Specific Goals
Now that you have all your income and expenses listed, determine what your goals are. Set short-term goals (to be achieved within the year) and long-term goals you wish to achieve down the road. You can then realign your expenses to meet your financial goals.
5. Make Any Necessary Lifestyle Adjustments
After determining a budget, you must stick to it. Adjust your habits and lifestyle, so you can save on costs. For example, cook more at home rather than frequently eating out. You may also consider shopping less often than you normally do.
Discover the Best Savings Account for Your Budget
It is important to have a savings account open, so you can begin saving once you establish your budget. The experts at Clark County Credit Union are here to help you discover which type is the best savings account for your needs. Contact us today at 702-228-2228.