Comerica: Developing a Budget

Jan 28, 2019 11:30 AM ET
Article

It’s a new year and at the top of your resolutions list should be to develop a budget and stick with it all year. One of the best ways to reach personal financial success is by developing a budget, which allows you to see exactly what you have, what you spend and where there is room for saving.

“Budgeting is crucial to maintaining personal financial health,” says Irvin Ashford Jr., National Director of Financial Education, Comerica Bank. “Discovering where your money is going each month can help you avoid debt and increase your savings.”

Here are a few steps to help get you started with creating a budget of your own.

Know Your Expense: Write down your set expenses each month beginning January 1. Budget should include the basic expenses a family incurs in order to maintain a safe and acceptable standard of living. Items like housing, food, childcare, transportation, health care and taxes should go into a budget. Necessities like clothing, school supplies and other personal care items should also be included. These are your set expenses.

Spend Wisely: The money left over after you subtract your set expenses from your monthly income is your discretionary funds. It is important to keep track of how you are spending your extra money. Save receipts for everything you buy and document in the budget exactly what you spend, and where. By carefully evaluating your discretionary expenses you can avoid financial strain and set up an effective savings strategy.

Stick to Your Budget: Be sure all members of your family are on board with the budget you lay out. Carefully evaluate your last few months of spending and decide what you can commit to cutting and what you cannot give up. Until your debt is evened out, avoid credit cards and if a payment schedule is necessary, factor your monthly payment into your set expenses.

Consult an Expert: Finally, don’t be afraid to ask for outside help when organizing your budget. Your local consumer credit counselor or banker is a good source of information. Additionally, there is a wide variety of budgeting programs and apps – both free and paid – as well as free online budgeting calculators.

Remember, it will take a few tries to get your budget perfected so don’t give up if it is not exactly right the first month. Keep developing a budget that works for you and your family and soon this will be the easiest resolution to stick to all year.

Source: Comerica Bank