Create a Budget & Stick to it

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posted 4/1/2014 in Education

Having control over your money is important, both for your financial well-being and for your peace of mind. Creating a budget can help you feel more in control of your finances and allow you to save more money for your short- or long-term goals.

At Northwest Bank we support our customer's efforts to budget and save by offering expert guidance. A financial goal can be very motivating - whether you are saving for a family vacation, a down payment for a new house or a new pair of shoes, if you stick to a plan, you're likely to achieve your goal.

Putting together a household budget requires time and effort. Northwest Bank offers the following steps to create a budget:

  1. Be a Spending Sleuth. Track every penny you spend for a month. Keep receipts and write everything down. This will be an eye-opening experience and will help you see where you can cut back.
     
  2. Count Your Money. Determine the total amount of money coming in. Include only your take home pay (your salary minus taxes and deductions). Your income may also include tips, child support, investment income, etc. Your final take-home pay is called net income and that is the number you should use when creating a budget.
     
  3.  Itemize, Categorize, Organize. Review the records and receipts you’ve been collecting over the last month and check your online banking record.
     
  4. Set a goal. Set a realistic financial goal and develop your budget to achieve that goal. Subtract your monthly expenses from your monthly income. Find ways to cut spending and set limits on things such as entertainment expenses.
     
  5. Save, Save, Save. Make one of your financial goals to save a certain dollar amount each month. Start an emergency fund if you don’t already have one. You never know when you may need it.
     
  6. Stick to it. Keep track of your spending every month. Update your budget as expenses or incomes change. Once you achieve your financial goal, set another.