Budgeting

Prioritize your spending and manage your money with a budget.
 

A budget is a spending plan for your money that balances your expenses with your income
and helps you make conscious decisions about how you spend your money.

Why create a budget?

Gain control of your finances with a budget. A budget helps you determine how much of what you make you keep. It is the best way to make sure you have enough money for the things you need and reach both your financial and life goals. 

What makes up a budget?

You have to know what you have coming in to know how much you can have going out. Two important elements that make up a budget are income and expenses. 

Step 1: Income

The first step to every budget is to know your monthly net spendable income. This is your take home pay after any taxes and/or automatic deductions.

Step 2: Expenses

The second step is to list your expenses. This includes:

• Fixed expenses: Bills you pay every month that don't change. Examples: your mortgage or rent, car payment, student loan, cable bill, cell phone, etc.
  
  
• Variable expenses: Bills that fluctuate on a month-to-month basis, depending on how much of that item you've used. Examples: utilities, gas, food, credit-card payment, etc. This category includes unnecessary fees you can avoid, such as late fees, non-sufficient funds fees, payday lending charges, over-limit fees, and annual credit card fees.

Start by pulling your bank statements for the past two months and go through each check or debit line by line. Then download this worksheet and plug in your spending.

Step 3: Do you have a shortage or a surplus?

Once you have accurate amounts for every dollar that comes in and out, it is simple math. Take your total income and subtract your expenses.

Total Income - Total Expenses = +/- $

If you find that you have a shortage and are spending more than you make, increase your income or cut your spending. If increasing your income isn't an option, identify where you can cut your spending with expenses that may not be necessary. 

Look for Leaks!

Whether you have a shortage or a surplus, it's important to re-evaluate your spending habits and look for ways to save. Dupaco's free Money Makeover can help you identify opportunities where you can pay less and save more. 

Pay Yourself First

YOU are as important as the utilities or your landlord. Make yourself a priority now by paying yourself first. Before you pay your bills or buy groceries, set aside a portion of your income to save. It will help you resist the temptation of skipping savings and help you stick to your budget by not spending money on other things. It's okay to start small, even just $5 or $10 a week will help you save more and spend less. 

When creating a budget, it's important to: