How to create and

stick to a budget this year.

The New Year: It’s the time when almost everyone is focused on adopting healthy habits, like exercising more, eating better and stressing less. And while that’s great, we’d also like to remind you to look out for your financial health. Because a little self-care when it comes to your finances is extremely important. Not sure where to start? We’d love to be your personal budgeting coach.  Let’s begin with these simple steps.


1.   Take a deep breath.

Budgeting doesn’t have to be as intimidating and overwhelming as you might believe. Try not to think of it as suddenly having to restrict your spending, but instead that you’re going to start spending as efficiently as possible, so you can save more and reach your financial goals.


2.   Gather your financial statements.

When it comes to this part of the process, the more information you have up-front the better. Think paychecks, bank statements, investment and credit card statements, utility bills, rent/mortgage, child and spousal support, etc. Essentially anything that reflects any income and expense.


3.   List your income.

In addition to your regular salary or wages (use the net income on your paycheck), make sure to add up other types of income. Also, if your take-home pay isn’t always the same every month (maybe you’re in sales, food service or freelance), go with your lowest-earning month. Remember, don’t include things like bonuses and overtime since those aren’t guaranteed.


4.   List/add up your expenses.

First, start with your fixed expenses. Think of these as the things you really need to pay, like rent/mortgage; health, auto and homeowner’s/renter’s insurance; car payments, utility bills, groceries, gasoline, a basic telephone bill, other payments such as loans, child care and credit card debt.

Next come your discretionary expenses, or your wants. Think new clothes, eating out, entertainment, gym memberships, vacations, unlimited data, cable/streaming packages, etc.

Finally, it’s time to think about your financial goals/savings. This is for things like an emergency fund, a savings account, retirement accounts, 529s or other college accounts, additional investments, extra payments on mortgages or student loans, etc.


5.   Evaluate your budget.

Now, it’s time to compare the totals of your income and expenses. Ideally, you should be spending less than you earn and have extra to contribute toward your financial goals. If you aren’t, or even if you are, take a really good look at what you’re spending and where. Can you cut your data plan, dinners out or cable/streaming services to contribute more to savings? Having a budget is a really important self-reflection exercise that will definitely pay off in the long run.


6.   Monitor your budget.

So, a budget isn’t just something you make, cross off your to-do list and ignore. Be sure to monitor it every month. And remember, it isn’t set in stone. As income and circumstances change, you’ll need to revise.


There are a lot of budget templates and apps online you can take advantage of, if that interests you. Why not give our home budget calculator a try? Of course, our financial experts are always available if you need more help. Simply stop by your Croghan Colonial Bank office, or give us a call at 888-276-4426.

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