Developing a budget can feel like a pain. And sticking to one is even more difficult. As a PNC Bank Branch Manager on a college campus, Constance Spires sees this every day. In fact, many students who come in to Spires’s branch for financial assistance believe they’ve been hacked.
They really don’t have an idea of what they’re spending their money on. When you take the time to walk them through all of their transactions, they usually are surprised at how their spending adds up.
This issue is not exclusive to college students, of course. The good news is that budgeting is really about changing your mindset. These simple steps will help you embrace that mindset and create a budget that is both realistic and sustainable.
1. Find a format you like. There are plenty of paper and online options available on the internet. Pick several. You might find that one style works better for you than others. Once you’ve made your choice, you’ll want to include the entire family in the budget process. Establishing a detailed budget will enable you to better track your results, identify opportunities to lower expenses and keep you on a path to achieving your financial goals.
“I encourage customers to use online bill pay. When you use Virtual Wallet®, there are money management tools that can help you budget for pre-authorized expenses,” Spires says.
2. Gather general spending information. Not just monthly bills, but those "persistent" things like gas, food, entertainment, recurring subscription charges, etc. This will probably develop over a couple of months as you gather information. Don't forget annual or semi-annual items like insurance, taxes, holiday expenses, etc.
3. Build in savings payments. Make sure your budget includes savings for various scenarios - and remove that amount first. It is best to have this money taken from your paycheck directly, so you aren’t tempted to spend it. Every family is different, but generally, a good allocation plan is as follows:
- 70% of income for living expenses
- 20% of income for a “buffer fund” (saving for emergencies or unexpected expenses)
- 10% of income for long-term savings (retirement, college, etc.)
4. Allow yourself time and flexibility in your daily expenses. Don't try to "fix" everything at once. It takes a long time to get used to a budget and to pay down bills, especially if you've loaded yourself up with debt.
Spires encourages her customers to start small. “Start by packing your lunch. Many people believe they simply can’t afford to save. However, if you go through your transaction history, there’s usually something seemingly small that adds up and that you can cut out without missing it too much.”
5. Don't be afraid to ask for help. There are plenty of places in every town that can help you create a budget.
6. And if at first you don't succeed, keep trying. Just by paying attention to your money and where it goes creates a sense of accomplishment and helps you reach your goals.
We often look at saving as something we do once all of the bills are paid. When in fact, you are your most important bill. Consider saving as an investment in yourself, the most important one you can make. We invest in ourselves by going to college, buying a car, or owning a home but when it comes to saving for our future, it all begins with a budget.
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