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How to Develop and Finally Stick to a Budget
Creating a budget you can actually stick to is all about building strong habits. Follow these six simple steps and create a budget that works for your lifestyle.
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.
2018 Resolutions: Goal, Plan, Action
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.
Learn how Virtual Wallet ® can help you take control of your money »
Constance Spires says it’s not about the money you have, it’s about the habits you build
It’s impossible to work on a budget if you don’t know where your money is going. Take a week or two weeks and write down everything you spend. Chances are you’ll be shocked.
- Constance Spires
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Important Legal Disclosures & Information
The material presented in this article is of a general nature and does not constitute the provision by PNC of investment, legal, tax, or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions expressed herein are subject to change without notice. The information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy. You should seek the advice of an investment professional to tailor a financial plan to your particular needs. For more information, please contact PNC at 1-888-762-6226.
The PNC Financial Services Group, Inc. (“PNC”) uses the marketing names PNC Wealth Management® and Hawthorn, PNC Family Wealth® to provide investment, wealth management, and fiduciary services through its subsidiary, PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and to provide specific fiduciary and agency services through its subsidiary, PNC Delaware Trust Company or PNC Ohio Trust Company. PNC also uses the marketing names PNC Institutional Asset Management®, PNC Retirement Solutions®, Vested Interest®, and PNC Institutional Advisory Solutions® for the various discretionary and non-discretionary institutional investment activities conducted through PNC Bank and through PNC’s subsidiary PNC Capital Advisors, LLC, a registered investment adviser (“PNC Capital Advisors”). Standalone custody, escrow, and directed trustee services; FDIC-insured banking products and services; and lending of funds are also provided through PNC Bank. Securities products, brokerage services, and managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and member of FINRA and SIPC. Insurance products may be provided through PNC Insurance Services, LLC, a licensed insurance agency affiliate of PNC, or through licensed insurance agencies that are not affiliated with PNC; in either case a licensed insurance affiliate may receive compensation if you choose to purchase insurance through these programs. A decision to purchase insurance will not affect the cost or availability of other products or services from PNC or its affiliates. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”). Investment management and related products and services provided to a “municipal entity” or “obligated person” regarding “proceeds of municipal securities” (as such terms are defined in the Act) will be provided by PNC Capital Advisors.
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These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.
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