Seven Steps to Build a Budget
Saul Ramos | 7/10/2014, 9:08 a.m.
The summer months provide great opportunities for us all to get fit and healthy, with warm weather and a host of activities to get us moving. Just as importance as our physical health is our financial well-being, and one of the easiest ways to get financially fit quickly is to establish a budget. Here are seven simple steps to get you started.
Find a format you like. There are plenty out on the internet. Pick several. You might find that one style works better for you than others. Paper and on-line options are available. Once you’ve made your choice, you’ll want to include the entire family in the budget process. Establishing a detailed budget will enable you to better track your results, identify opportunities to lower expenses and keep you on a path to achieving your financial goals.
Gather general spending information - not just monthly bills, but those "pesky" things like gas, food, entertainment, etc. This will probably develop over a couple of months and as you gather information, don't forget annual or semi-annual items like insurance, taxes, Christmas, etc.
Build in savings payments. Make sure your budget includes savings - long term, wish list and emergency - and pay those first. It is best to have this money taken from your paycheck directly, so you don't ever see it. Every family is different, but generally, a good allocation plan is as follows:
a. 70% of Working Income for living expenses
b. 20% of Working Income for a “buffer fund” (saving for emergencies)
c. 10% of Working Income for permanent savings (retirement, college, etc.)
Allow yourself time and flexibility in your daily expenses. Don't try to "fix" everything at once. It takes a long time to get used to a budget and to pay down bills, especially if you've loaded yourself up with debt.
Don't be afraid to ask for help. There are plenty of places in every town that can help you create a budget. Many are free, or income based.
And if at first you don't succeed, keep on trying. Just by paying attention to your money and where it goes creates a sense of accomplishment, and helps you reach your targets.
To learn more about creating a budget, planning for retirement and other personal finance topics, join us at PNC Fairfax Connection for our Financial Empowerment series (July 9, 16 and 30 at 5:30 p.m.). We also offer a similar course tailored to young adults. We hope to see you there.
PNC Fairfax Connection is a free community resource center at E. 83rd St. and Carnegie designed to strengthen and connect the community by empowering area residents and businesses to achieve their goals while celebrating the community’s rich history and heritage. Everyone from toddlers to teens to grandparents – individuals and business owners alike - can access innovative technology, educational opportunities, chances to connect with each other and exciting new experiences.
The center is open Monday through Saturday.
Monday (10 a.m. to 4 p.m.)
Tuesday and Wednesday (12 p.m. to 8 p.m.)
Thursday (10 a.m. to 6 p.m.)
Friday (10 a.m. to 4 p.m.)
Saturday (10 a.m. to 2 p.m.)