When you hear the word budget you may think of words such as “restrictive,” “frustrating” or even “miserable.” We hear you. Budgeting isn’t always fun, but it’s an important part of life that allows you to ensure your critical needs are fulfilled so you are able to enjoy life. Budgeting can be liberating and lead you to a less stressful life.

Set Your Goals

Setting goals is easy. The challenge is actually accomplishing them. If you are looking to get better at budgeting or saving, it’s important to use the SMART method to make them realistic and achievable. This method tells users to make their goals specific, measurable, achievable, relevant, and time bound. Writing down your goals turns them into a reality, serves as a reminder, and helps deter resistance in the future.

Setting both short- and long-term goals is critical. Your short-term goals will take about 6-12 months to accomplish, while your long-term goals will usually take more than a year. The most important part of a goal is sharing it so others can hold you accountable.

Construct Your Budget

The best way to begin building your budget is tracking your purchases. Categorize items in your checking account and credit card history from the previous month and or keep your receipts for everything you spend during a 2-week timeframe. Make sure that you pick a "normal" month when reviewing your spending.

After seeing your spending in an organized place, you’ll need to define your wants and needs. “Wants” are things that are nice to have, but are not vital to your survival such as a high-end car, designer clothes, or the newest cell phone. “Needs” are things you cannot live without such as housing, transportation, and utilities.

It’s best to organize your expenses into these three categories:

FIXED amounts do not change monthly

VARIABLE amounts typically do change monthly

PERIODIC quarterly, semi-annual, and annual payments

Typically, the next step in the budget building process is to create categories.

Our experts recommend:

• Housing: 35% of your budget
• Life - such as groceries & clothing: 25% of your budget
• Transportation: 15% of your budget
• Debt Reduction: 10% of your budget
• Savings: 10% of your budget

The digital Budgeting Tool within Elements online and mobile banking can be useful for helping you with this process.

Maintain Your Budget

To manage your budget, you must manage your behaviors:

• Learn to say "no"
• Ask yourself before you buy
• Cut your wants in half
• Don't spend more in a category than you have budgeted

To cut down your costs, consider these tips:

• Home or Auto: Consider refinancing for a lower rate and payment
• Insurance: Shop your insurance every 3 years and bundle lines of coverage
• Phone: Check into new plans or cancel your landline subscription
• Cable and Internet: Consider your actual usage and evaluate which plans best meet your needs
• Food: Eat out less often and give yourself a budget for when you do
• Grocery Shopping: Shop with a list or consider online delivery options
• Entertainment: Find a low or no-cost activity such as having a family movie night at home
• Utilities: Set up budget billing and look for ways to reduce usage

Overall, budgeting might be a sacrifice in the short-term, but it will lead you to more successful financial habits in the future. Have questions or need trusted advice? Our credit union experts are always here for you. Contact Elements Financial for support in all aspects of your financial life.

This information is provided for informational purposes only. It does not constitute legal, tax or financial advice. Consult with your tax, legal or financial adviser before taking any action.