Budgeting in the New Year

A practical, workable budget is one of the most crucial tools in your financial wellness arsenal. It's is your blueprint for keeping cash flow positive, and for sticking to your saving goals.

If you have a partner, it's essential to have one overall household budget. That big picture is indispensable for having a good sense, based on actual numbers, of where the two of you stand financially, and how you plan to stay on track throughout the year.

Remember, a budget is there to help you, and it's not written in stone.

Whether or not you have a partner, start your budget by listing all your anticipated monthly expenses. It can be helpful to divide them by how frequently they occur. Budgeting helps you meet your goals and prioritize your expenses. Creating a list of how much money comes in and how it’s spent is the first thing you should tackle when trying to figure out how to make a budget. This income budget calculator provides a way to create such an expense list. And, as you enter your information, this calculator will help you consider how to create a budget plan that will work efficiently for you. 

Fixed v. Variable

For the fixed expenses, such as rent or phone, it's easy to fill in the exact amount you know you'll have to spend. On the other hand, with the variable expenses, like groceries, there is no single amount you'll spend each month. But based on what you've spent in the past, you should be able to estimate a fairly accurate number for most weeks.

The next step is to compare your income to your expenses. In order to achieve (and maintain) a positive cash flow, you may have to adjust some of the variable expenses—which probably means cutting back or cutting some of them out altogether.

You should revisit your budget on a regular basis. Remember, it's there to help you, and it's not written in stone. Adjusting it if your overall household income changes is important.

Spread the Wealth

If your budget changes because you get an influx of cash, maybe from a bonus or an inheritance, you may be tempted to use it to cover increased variable expenses, like eating out, travel, or the newest phone. Certainly using some of the money that way is fine. But it's also a great opportunity to pay down debt or to increase what you're putting away in savings—either in an emergency fund, a retirement plan, or your investment portfolio.

Disclaimer
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

Neither Pittsfield Cooperative Bank or Banzai make any warranties or representations as to the accuracy, applicability, completeness, or suitability for any particular purpose of the information contained herein. Pittsfield Cooperative Bank and Banzai expressly disclaim any liability arising from the use or misuse of these materials and, by visiting this site, you agree to release us from any such liability. Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.