Budgeting For Every Dollar
Create a budget that’s right for you!
Do you follow a monthly budget, but still feel that you are unable to reach your goals? Does your budget indicate you should have a surplus, but you find yourself falling short or unable to save any money? Monthly budgets are essential, but if you are not accounting for your money as it comes in, things can easily fall off track. A good way to make sure your money is working for you is to account for every dollar that you have coming in each month.
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If you get paid once a month, managing your money monthly makes the most sense, but if you get paid weekly, biweekly or every two weeks, it often makes more sense to budget your money with each paycheck. As soon as you get paid, assign certain expenses to be paid out. Maintain your monthly budget, as it will be your guide, but account for all of your expenses by paycheck.
- Fixed Expenses: Your fixed expenses are those that remain the same every month such as your mortgage, rent or car payment. Often these are your largest expenses. Since these payments have dates assigned to them, you can assign a paycheck to cover these expenses. For example, if you get paid bi-weekly and your rent is due the 1st of the month, you can assign the last paycheck of the previous month to cover your rent. However, if your rent is $1,000 a month and your paycheck is $1,200, you are setting yourself up for failure by counting on that paycheck to cover the entirety of your rent. In this type of circumstance, it would serve you better to assign a certain amount from each paycheck to cover your rent. Having a separate checking account in which you can transfer money to cover your bills is an easy way to ensure your money is going where it needs to each month. You may be able to comfortably take $500 from each bi-weekly paycheck to apply toward your $1,000 rent payment, but if you have higher expenses at certain times of the month, you will need to figure out the amounts that make the most sense for your situation.
- Flexible Expenses: Your flexible expenses are those that vary each month, such as groceries, entertainment, and other miscellaneous items. Some of your flexible expenses are necessities, such as food, and some are wants, such as dining out. This is an area of your spending where you have the most control and must be mindful to stay on top of each month. For example, you probably spend a similar amount at the grocery store each trip, so this is an expense that you may be able to easily account for as soon as you get paid. If you are paid every two weeks, and you generally spend $150 a week on groceries, you can automatically set aside $300 to cover food for the next two weeks. You also can account for certain amounts you feel comfortable spending on your other miscellaneous expenses. Staying on top of how much you spend is so important to staying on track with your budget. If one week, you spend $200 at the grocery store because you have guests coming over, you may want to avoid other miscellaneous expenses to make up for the $50 you overspent.
- Savings: Here is where accounting for each dollar will prove to be the most beneficial. When you are not assigning an expense to every dollar, your savings is usually the first that will suffer. If your monthly budget indicates that you have the ability to save $300 each month, then you should be putting $300 into a savings account each month. Once you determine the amounts that are coming out of each paycheck for your fixed and flexible expenses, you can figure out exactly how much you can pull out from each paycheck for savings. As soon as you get paid, you can put that pre-determined amount immediately into your savings account. Knowing that your other expenses will be covered will help you comfortably get into the habit of paying yourself first
Read More: Use A SMART Goal To Budget For Your Next Big Purchase
By budgeting for each dollar as it comes in, you will be able to gain more control over spending habits and be better positioned to reach your financial goals. If you are interested in receiving personalized guidance on budgeting, you can call one of our certified counselors at 800-992-4557 or visit our website.
Lauren Lovett has been with Navicore Solutions for seven years serving as a Certified Credit Counselor and Grant Writer. While in these roles, she has witnessed the positive impact that the organization’s counseling services has on improving the money management skills and economic security of individuals and families in need.