Budgeting can seem like a daunting task, especially after this past year, but it’s an important one.
Here are some reasons why budgeting is extremely important:
- Ensures that you will always have the funds that you need to meet your expenses
- Leads to a happier retirement
- Helps shed light on bad habits
There are multiple ways you can budget depending on your preference. You can budget by hand, in a notebook or folder or electronically. There are multiple budgeting apps and websites you can use, or you can create a simple spreadsheet.
To make budgeting simple, we have broken it down into four easy steps:
- Compile your financial information — Gather any of your personal financial information, including (but not limited to) bank statements, investment accounts, recently recurring bills, W-2s and recent pay stubs, receipts and loan statements.
- Determine your net income — calculate how much you earn AFTER taxes and other withholdings
- Determine your expenses — separate variable expenses from fixed expenses
- Adjust expenses — if they are higher than your income, figure out if there are expenses you can cut
PAY can be used for bills that are due in between paychecks. By using PAY, instead of waiting for your next paycheck, you will be eliminating potential overdraft fees and financially detrimental payday loans.
SAVE can be used to ensure that you are continuing to add money to a savings account. This feature allows you to save a certain amount of money automatically every pay period, or you can just add money to your savings account whenever you want to.
Looking for more financial wellness tips? Check out our financial wellness resources.