Tips for Creating an Effective Budget

Knowledge Center

Tips for Creating an Effective Budget

Tips for Creating an Effective Budget

Having a healthy relationship with money is key to financial peace of mind. In order to reach this, it’s important to know how to create an effective budget that fits your lifestyle while also taking care of your needs. We are here to guide you on the path to creating the best budget for you, so you can achieve a healthy financial lifestyle. Follow these tips to create your effective budget:


Calculate Your Income

The foundation of an effective budget begins with calculating your net income. Your net income is your total wages or salary minus deductions for taxes and employer provided programs such as retirement plans and health insurance. If you were to focus on your gross (or overall) income instead of your net income, it could lead to you overspending because you will think you have more money available than you actually do. Be sure to include any additional income you may receive such as alimony, child support, earned interest, and dividends into your calculations. Once you know how much money you have coming in, you can review where it is going.


Track Your Spending

Tracking and categorizing your expenses can help you determine what you’re spending the most money on and where it might be easiest to save. Begin by listing any fixed expenses you have. These include regular monthly bills such as rent or mortgage, utilities, and car payments. Next you can list expenses that may tend to change from month to month such as groceries, gas, and entertainment. This area of expenses may have more opportunities for you to cut back. Sometimes it’s easy to lose track of your spending, especially when using a debit or credit card. The best way to keep an eye on your spending is to regularly review your monthly statements or set up account alerts to notify you each time a purchase is made. We offer e-Alerts for your Robins Financial debit and credit cards that will send you a notification when your card has been used. You can also enroll for e-Statements to ensure there is no delay in receiving your monthly statements. Take advantage of these tools to help stay on track with your spending and stick to your budget.


Establish Realistic Goals

Setting financial goals is great motivation to making sure you’re staying within your budget each month. Make a list of your short and long-term financial goals that you would like to reach. Short-term goals should take around one to three years to achieve and may include things like paying down credit card debt or establishing a certain amount in your emergency fund. Your long-term goals, like saving for retirement or to send a child off to college, may take decades to reach. Your goals don’t have to be set in stone, and may change over time based on certain life events or change in income. Use these goals to help propel you forward and shape your budget to best achieve them.


Make Your Plan

Your plan is where everything finally comes together: what you’re actually spending vs. what you want to spend. Use your fixed and prone-to-change expenses to get a good sense of what you’ll spend in the coming months. Then compare this amount to your net income and priorities. You should consider setting specific spending limits for each category of expenses. Keep in mind the 50/30/20 rule when building your budget. This rule states that 50% of your income should be allocated to paying for your needs, 30% should cover your wants, and the last 20% should be used to pay off debt and put away into savings. After analyzing your finances and building your budget, if you find that your wants or debt overpower your needs, you may need to reevaluate your spending habits.


Review Your Budget Regularly/Adjust as Needed

Once you have your budget set, it’s important to review your budget and your spending on a regular basis to make sure you are staying on track and reaching your financial goals. You can always make adjustments to your budget as needed depending on certain life events that take place. You may get a raise, your expenses may change, or you may knock out one of your financial goals and want to start planning for a new one. Whatever your reason, make it a habit and a priority to regularly check in with your budget.

The New Year is approaching, so leave all of your financial stress behind by establishing an effective budget to improve your finances. You can learn more about setting your budget up for success next year and other financial tips by heading to our Knowledge Center. We are here to help you on the path to reaching your financial goals, you just have to be willing to take the first step.




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.


Track Your Finances