A Household Budget Can Help You

A budget is more than staying organized. A good budget helps you: 

• Know Your Accounts: Tracks monthly income and expenses. 
• Stay on Track: Keeps your spending in line with income.
• Reach your Goals: Plan and save for things that matter to you. 
• Prepare for the Unexpected: Building a safety net can come in handy when life surprises you. 

The Basis of Budgeting is Simple - How Much Money Comes in, and Where Does it Go? 

Your budgeting tool doesn't need to be fancy. Good old-fashioned pencil and paper, or our online Cash Coach tool can help you keep track of your numbers. Simply record and total your monthly income and expenses.

Staying consistent with tracking and monitoring your monthly budget can help you make adjustments as necessary. Your budget should grow and change with you. 

Tracking Your Expenses – Expected and Unexpected

Looking at your monthly expenses is the first step in creating your household budget. This step may take a little time, so don't push yourself to finish it in a single sitting. 

Start by making a list of your regular bills and expenses: 

• Review Your Past Bills: If possible, review the past year's bills to spot expenses that may not happen on a monthly basis.
• Find Your Monthly Average: Based on the number of months that you have prior bills and/or statements, you can determine your monthly average expenditure. For example, if you have three months of bills, add them together, and divide by three. For a full year, total all expenses, and divide by 12. 
• Review Your Bank Statements: Bank statements can also show other expenses that you may have paid for by debit card or checks. 

Our Cash Coach tool can assist in categorizing and adding your monthly expenses.

Cash Coach

Cash Coach is an easy-to-use digital banking tool that helps you take control of your finances.

See your complete financial picture: View and sync accounts from 20,000 financial institutions.

Understand spending habits: View categorized transactions to organize and review your monthly spending.

Cash Flow Calendar: Make informed choices by planning ahead for future bills and income.

Budget Progress: Create monthly budgets and account alerts to set and track monthly budget.

Set Goals: Set financial goals to start saving or paying off debt.

Here Are Some Important Expenses to Track:

Fixed Payments

These are costs that stay the same - Rent or mortgage payments, car payments, student loans, etc. Don’t forget regular but occasional expenses, such as a semi-annual auto insurance payment

Variable Costs

These are costs that you have to pay monthly but have totals that vary – Gas, electric, water and phone bills, as well credit card payments.

Ongoing Expenses

This category includes items like fuel for your car, groceries, as well as entertainment costs – such as going out to eat, drink, watch a movie - or vacations and other travel expenses.

Irregular Expenses and Cash

These are miscellaneous expenses, such as clothing, birthday and holiday gifts, medical copays or prescriptions, printer ink, charitable donations, sporting events, and cash you might spend on snacks or other small purchases.

Set up the expense categories in your household budget so you can track your regular expenses individually. This can help you monitor changes in your spending and remind you to make sure you've paid a bill.

Expect the Unexpected - Rainy-Day Fund

You should also set aside money each month for unexpected expenses, such as emergency medical bills or car repairs.

Although there's no specific amount, it's always better to be safe than sorry when it comes to unexpected life events. Below are some common guidelines for building a rainy-day fund:

• Keep a separate savings account with an extra $1,000 to $2,000.
• Set aside 10% of your monthly income.
• Give yourself a cushion of, at least, six times your monthly average expenses.

Tracking Your Income

 The key to developing a household budget is spending only what you can afford. By knowing how much money you have coming in, you'll have a better idea of how much you can afford to spend and save. 

How Much do You Currently Have in the Bank?

The money  you currently have in your checking and savings accounts is your starting point. But don’t touch your savings – this is a head start for your future goals.

Cash Coach allows you to view your account balances, including other accounts across 20,000 financial institutions. 

How Much do You Get Paid?

This includes your paychecks and other regular income that you expect to receive. Leave overtime pay out of your base income calculations, since that money may not be guaranteed every month.

Your list of expenses will be the estimated total of what you have to spend each month. Your income total will show how much money you have to cover those expenses – and hopefully you will have enough left over to set aside for saving.

Can You Reduce Expenses in Order to Save?

After reviewing what you spend each month, see if you can economize by cutting unnecessary expenses. Are you spending too much money on entertainment? If you raise the temperature in your house by a degree or two in the summer, or lower it in the winter, can you reduce utility bills? If you can afford it, could paying off loans early save money on interest payments? Can you reduce your driving habits to cut gasoline and maintenance costs?

Give yourself a challenge: Try to reduce your expenses and keep them down. The money you save will turn to income.

Your goal should always be to spend less than you earn. Use that extra money to put towards a savings account offered by your credit union or trusted financial institution. 

Review Your Budget and Stay on Track

Now that you've created your budget, you must get in the habit of consistently tracking income and expenses. Taking the time to review your budget at the end of the month can help you track your progress and make the necessary adjustments. 

At the end of each month, ask yourself:

• Did my income match what I expected? 
• Did I stay within my budget?
• Where did I spend more or less than planned? 

If you're over your budget, look for ways to cut back next month. 

If you're spending less than expected, you can decide to treat yourself to something with the extra money – or add it to your savings for a bigger treat in the future. Remember, it's always better to have extra money set aside in your savings. 

As your life changes, your goals and budget will change too! Ensure that your adjustments align with your future goals, whether that's saving for vacation or paying off a loan

Cash Coach helps you set financial goals and deadlines, so you can take the next steps toward achieving life milestones. 

Use these tips to plan ahead and prepare for the future.