How to Create a Monthly Budget That Works

Man and Woman looking at phone

By the second half of the month, have you ever wondered where your money went? If you answer “yes”, you’re not alone. A Gallup poll found only about 1/3 of Americans (32%) maintain a household budget. Managing a budget is simply telling your money where to go. And if you’re not good at budgeting yet, that’s okay! It takes a little time. But, with practice, you can be a pro!

1) Write down your total income for the month.
This is your total take-home (after tax) pay for both you and, if you’re a couple, your significant other.

2) List all your expenses.
Write down a list of all the expected expenses you plan on incurring over the course of a month. This includes a mortgage payment, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, student loans, retirement or college savings — essentially everything you spend money on.

3) Subtract expenses from income.
Your expenses should not total more than your income.

4) Track your expenses throughout the month.
Sit down every month and create a spreadsheet of your finances to help you keep track of unnecessary spending. This will immediately help you sort out what you need vs. what you want. If you need to cut back, you can decide which areas are the easiest to keep from spending. Once you do this, follow through with your budget and you’ll be on the road to financial control.

Other things to consider:

  • Have an emergency fund. At a minimum, you should strive to have at least $1,000 in savings to help cover unbudgeted, necessary expenses. Stashing away at least three to six months’ worth of income provides an even greater financial security in the event of a job loss or a bigger emergency.

  • Make every penny count. Even if saving a small amount of money seems insignificant, it will add up in the long run. That $4 mocha latte you have three times a week adds up to a whopping $624 in one year!

  • Reduce debt. Pay off high-rate credit cards first, and then try not to put more purchases on them. Also look into refinancing high rate loans to lower your payments and pay the bills off faster. Feel free to contact Chaffey Federal Credit Union to inquire about a balance transfer, or low-rate personal loan.

  • Search for deals. Do all you can do to get the best prices at grocery and department stores. Comparison shop, especially for big-ticket items. Scour ads closely and stock up on things you know you’ll need in the future when they are on sale. Start cutting coupons – it will be worth the time you put into it.

Please feel free to speak with a credit union representative at one of Chaffey FCU’s branches or call 909-986-4552 for more budgeting advice and information.

Anisa Agulto