Establishing a path to savings is easier than it seems — but it’s the actual saving part that can get tricky. Whether you’d like to save for a big trip or purchase, or would just like to get your spending in check, here are some tips to help you get started:
1. Figure Out Where Your Money is Going
The first step to creating a sustainable budget is figuring out why your money seems to “disappear” every month. There are numerous tools that can help you track your spending. Some of the most notable ones include Mint.com, YNAB (You Need a Budget) and good ol’ Google Docs or an Excel Spreadsheet. Our Online Banking platform also allows you to track your spending by category.
When creating a budget for the first time, you might want to also document your cash purchases. This may be an eye opening experience, as small impulse purchases can really add up!
If you’d like to go the “old school” route, you can use a balance book to document your purchases and checking account balance (pick one up for free at any of our branches!).
2. Analyze Your Fixed Monthly Expenses
Whatever stage of life you may be in (living with parents or you are a parent!) you probably have some expenses that are the same every month. From your Netflix subscription to monthly bills — however you choose to plan out your budget, make sure these expenses are included in your calculations.
3. Plug Spending Leaks
After you’ve tracked your spending for a couple of months and possibly judged yourself too harshly (or not harshly enough!) for your spending choices, you should have a solid idea of times when your money could have been smarter spent. Some areas traditionally quoted as “frivolous” spending could be your daily latte — but if that latte helps you get through work/school/child care, then it is not frivolous! Perhaps you realize that your taxi spending is out of control – or that you have lost some cash due to ATM fees from other financial institutions (check out our ATM Anywhere program!), identifying these areas as problematic is a great first step to getting your spending in order.
4. Devise a Plan
You’ve documented your spending. You’ve identified spending “leaks”, now what? Remember allowances? They taught us that we could only spend what we had, and if we wanted to make a large purchase, we’d have to save for it. The next step in devising a plan is to figure out what your weekly, bi-weekly or monthly allowance will be. Take your income minus your fixed expenses and expected expenses (a big dinner coming up, haircut, gas, etc), and whatever is left can be utilized as your allowance.
From here, you can determine whether this amount is feasible and sustainable for you. And guess what? You just budgeted. Want to learn more about ways to budget your money? We’ve partnered with BALANCE, a financial fitness program. Click here to learn more about money management.