The holiday season is a busy time. So before you make your shopping list this year, do a quick budget checkup. Rainy-day funds, planning gift purchases, saving for college or just making your rent payment can all be made easier with a budget. Whether you are saving for a family vacation, a down payment for a house or a new pair of shoes, if you stick to a plan, you’re more likely to achieve your goal. Putting together a household budget requires time and effort. Here are a few tips for creating a budget:
- Be a spending sleuth. Track every penny you spend for a month. Keep receipts and write everything down. This will be an eye-opening experience and will help you see where you can cut back.
- Count your money. Determine the total amount of money coming in. Include only your take-home pay (your salary minus taxes and deductions). Your income may also include tips, child support, investment income, etc.
- Itemize, categorize, organize. Review the records and receipts you’ve been collecting over the last month. Categorize your spending using a budget sheet.
- He shoots, he scores. Set a realistic financial goal and develop your budget to achieve that goal. Subtract your monthly expenses from your monthly income. Find ways to cut spending and set limits on things like entertainment expenses.
- Save, save, save. Make one of your financial goals to save a certain dollar amount each month. Start an emergency fund if you don’t already have one. You never know when you may need it.
- Stick to it. Keep track of your spending every month. Update your budget as expenses or incomes change. Once you achieve your financial goal, set another.
- Even children as young as preschool age can be taught financial responsibility. Discuss your own habits with your children. When you visit your local bank, explain to your child what you are doing: “I am depositing my paycheck so I can pay for our house and groceries.”
- Explain what an ATM is and how it works. Help your children understand that you must put money in your bank account before you can take it out of the ATM.
- You can begin a conversation with your child about saving simply with examples of currency. Gather coins and paper currency and explain the different values of each. You can even turn this activity into a math exercise by creating different dollar values and having your child identify the proper combination of currency and coin to reach that amount.
Denise Wheaton has served as a senior vice president with Independent Bank since 1987. In her service at Independent Bank, Wheaton helps manage the bank’s assets and network of full-service banking and loan offices. Regionally, Wheaton offers community banking leadership to 22 markets, and directs branch and retail administration.