How to Budget Your Money

Developing a Budget: The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your "fixed" expenses - those that are the same each month - like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary - like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.

Tracking your money is a helpful way to manage your funds on a daily basis, save for future expenses, and be able to pay down debt. If you're not sure where to begin, many government resources can help you figure out how to track your money.
Money Management Tips

The following tips are from the "Money Smart" curriculum, a free financial education program developed by the Federal Deposit Insurance Corporation (FDIC).

Create a Spending Plan

• In a notebook, list all of your sources of income (paychecks, child support, etc.) and all of your expenses for a month.


• Divide the expenses into two categories: fixed and flexible.Fixed expenses include rent/mortgage, utility bills if you're on a budget plan, and regular recurring expenses like child care or elder care. Flexible expenses include dining out and entertainment.


• To reduce your expenses, track every outgoing penny and decide what you can do without. Things like candy and cups of coffee can add up. If eliminated, you can put that money into a savings account.


• It's more economical to shop at grocery stores than at convenience stores.Take your lunch to work rather than eating out.


• Once you've developed a budget, stick to it, but revisit it when changes occur, like a raise in pay or a spike in gas prices.


• Find out if you are eligible for the Earned Income Tax Credit.


• If you are getting a tax refund, allow it to be deposited directly into a checking or savings account.

Open a Bank or Credit Union Account

Actually, consider opening at least two accounts, one for checking to pay your bills and one for saving to pay yourself.

• Go to one of three types of financial institutions: a bank, savings & loan or credit union.


• These three financial institutions are the safest because their deposits are insured by government agencies.


• Shop around for institutions that charge little or no fees and have reasonable minimum requirements, convenient ATMs, and other services that you want.There are a number of resources on the Internet that can help you comparison shop.


• In comparing savings accounts, go with the insured account that has the highest Annual Percentage Yield (APY).


• Look for checking accounts with no or low monthly fees, a low-minimum balance and opening balance requirement, and low fees for writing checks, buying money orders, and the other services that you will use.


• If you have a job or get a regular government check, get direct deposit.This sends your check directly into your account, saving you the cost of check cashing and worries about your check being late or stolen.


• Ask your bank or credit union to put some of your check into savings so that you can earn interest.

Pay Yourself First - saving is for everyone

• Interest in savings accounts compounds over time, so any amount saved is good.


• Once you pay off a car loan or other loan, keep setting aside the amount of that payment in a savings account.


• Save at least two to six months worth of income in an insured savings account for emergencies.


• Consider your future and invest some money in retirement accounts like Individual Retirement Accounts, 401 (k) accounts and the like.