How to Build a Better Budget



A BUDGET is a key aspect of financial literacy.  Up your budgeting game by thinking about the following:

Be realistic. The key to budgeting effectively and saving money is being realistic. Budgeting isn’t easy — it can feel like a restrictive diet.  In other words, try to make room in your budget for things you value, including entertainment. If you need to make significant changes, consider cutting back little by little and enjoying things in moderation. You probably won’t be able to completely alter your spending habits overnight.

Understand the costs and expenses that are distracting you from your budget. A budget can reveal unnecessary spending habits. Figure out a way to be disciplined, true and honest with yourself in curbing those expenses. Reward yourself through saving for those items.

Deal with debt from credit cards or loans. Make a plan to tackle debt through part of your savings strategy.

Goal setting is a key component of savings. A budget forces you to map out your goals and what you are saving for, whether it’s a large purchase (i.e., car or house) or a smaller purchase (i.e., new clothes or a concert ticket).

Expect the unexpected. Surprise expenses can throw a wrench into your budget. Set up an emergency fund as an extra budget category as a buffer to emergency costs (e.g., car and home repairs; illness) and larger expenses paid annually (e.g., annual insurance; taxes).

Track your income and expenses against your budget and adjust as needed. Review your budget regularly - every few months is suggested as a good check-in period. Remember that a budget is a spending plan that should reflect your life and match up with your goals and lifestyle.


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