A budget is the cornerstone of any money management plan, but determining where to start can be overwhelming. Here are six easy steps to create a budget that will set you on the path toward financial wellness.
- Set a goal – A dream written down with a date becomes a goal. Whether your dream is something as small as saving $100 for a killer pair of shoes or as ambitious as purchasing a home, seeing your dream in writing sets the stage to develop and stick to a budget.
- Identify income and expenses – You probably know how much you earn, but do you know where it all goes? List every single expense you encounter each month, as well as income from wages, side hustles, social security, dividends and more.
- Create spending categories – Give your dollars purpose by designating categories for all of your income. Include your fixed expenses such as housing, transportation and food, but also consider designating money to categories that will help you achieve your goals like an emergency fund or dream home fund.
- Track spending – Look at how closely you actually adhere to each spending category budget. Use a good old-fashioned notebook and pen to keep up with transactions, or consider a handy mobile app that aggregates all of your financial accounts.
- Adjust – There is no such thing as a one-size-fits-all budget and a budget that works for one month may not work in the next. Remember to be flexible and adaptable – always looking for ways to achieve your goals, but understanding that life happens. If you notice a pattern, reallocate your budget categories or try to find ways to adjust spending.
- Celebrate – When you reach your financial goal or hit a significant milestone along the journey, be sure to celebrate your hard work. Pat yourself on the back or do a happy dance – even the smallest financial success can motivate you to achieve more.
Learn more about building strong financial foundations with Hancock Whitney Financial Cents for Adults.