How to Build a Better Budget

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How to Build a Better Budget

How to Build a Better Budget


The key to achieving financial peace of mind is knowing how to create an effective budget that fits your lifestyle, meets your needs, and propels you to achieve your goals. If financial wellness is included in your New Year’s resolutions, read ahead for our tips to build a better budget. We’re here to guide you on the path to creating a healthy budget that helps you get on track to meet your financial goals.


Calculate Your Income

Your income is the foundation of building an effective budget. Here’s how you can calculate your income to serve as the basis for your budget: 

  • Calculate your net income by taking your total salary and subtracting deductions for taxes and employer-provided programs, including health insurance and 401(k) contributions. 
  • You will also include any additional income you may receive, including alimony, child support, dividends, etc. 


It’s important to build your budget based on your net income (what you bring home) rather than your gross income (before deductions), as it could mislead you into overspending because you think you have more money available to spend than you do. 


Once you know how much money you have coming in, you can review where it’s going.


Track Your Spending 

Reviewing and categorizing your expenses will help you determine where you’re spending the most money, and where it will be easiest to save. 

  • Start by listing all fixed expenses you have, which will include your monthly regular bills like rent or mortgage, car payments, some utilities, etc. 
  • Next, list out your variable expenses (things that may change from month to month), like groceries, gas, other utilities, entertainment, etc. This category of expenses will have more opportunities for you to cut back on spending. 


We know that sometimes it’s easy to lose track of your spending, especially when using a debit or credit card if you don’t consistently check your balance. That’s why we offer a variety of tools to help you stay on top of your spending: 

  • Regularly monitor your account in Digital Banking or review your monthly statements. 
  • Enroll in  e-Statements to ensure no delay in receiving your monthly statements and reduce your risk of identity theft.
  • Use our new Financial Tools feature to link all of your accounts in one place and see your full financial picture.


Taking advantage of all of the tools and features available to you will help you stay on track with your spending and stick to your budget.


Establish Realistic Goals

Setting financial goals that you can stick to is a great way to keep you motivated to stay on track with your budget. Make a list of all of your short-term and long-term financial goals that you would like to reach.

  • Your list of short-term goals will be for things that should take around 1-3 years to achieve and may include things like paying down credit card debt or building up a certain amount in your emergency fund. 
  • Your list of long-term goals will be for things that may take a whole to reach, even decades. This will include things like saving for retirement or saving for future college expenses. 


Your goals don’t have to be set in stone, and they may change over time depending on life events or changes in income. That’s okay! Your goals, just like your finances, can be a little flexible. Use these goals to shape your budget and keep you inspired to achieve your desired outcome.


Make Your Plan 

Your plan is where everything finally comes together. You see the full picture of how much you’re bringing home, what you’re spending versus what you want to spend, and how changes in both affect your goals. 

  • Use your fixed and variable expenses to get a good sense of what you’ll spend in the coming months, then compare that amount to your net income and your priorities. 
  • Consider setting spending limits for each category of expenses. 
  • Keep the 50/30/20 rule in mind as a general framework for building your budget. This rule states that 50% of your income should go toward paying for your needs, 30% should cover your wants, and the remaining 20% should go to paying off debt and saving for your goals. 


If after analyzing your finances and building your budget, you realize that your wants or debts overpower your needs, you will need to reevaluate your spending habits and recreate a budget that serves your needs now so you can ensure you reach your goals in the future. 


Review and Adjust as Needed 

As we mentioned, we know that things are always changing and your financial situation is never set in stone. It’s perfectly okay for your budget to shift over time to align with your circumstances and goals. What matters is that you are setting goals and keeping your spending in check with the guidelines you’ve set for yourself. This way whether you get a raise, have an increase in expenses, have a new financial goal pop up, or whatever the case may be, you are making it a habit and a priority to regularly check in with your budget and make adjustments to meet your goals. 


At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.


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