How To Kick 2019 Off with a Personal Budget

With 2018 coming to a close and the New Year right around the corner, it’s only natural to start thinking about ways that we can improve ourselves in 2019. Gym memberships and healthy eating tend to top the list, but what about improving your financial self in the upcoming year? According to a study from the National Endowment for Financial Education, only 24 percent of millennials demonstrate basic financial literacy. The numbers are just as bad (if not worse) when looking at credit card debt, savings, and retirement plans.

This New Year, consider creating (and sticking to) a personal budget and start to improve your financial self.

How to Create a Budget: 4 Ways to Get Started

1. Determine Your Income and Spending Habits

Whether you are paid a regular salary or your income fluctuates each month, creating a budget starts with understanding how much income you have. Take a look at your last month’s income as a starting point, then review your spending habits from previous months. An easy way to help you manage your money is using a financial app like the Points West Community Bank mobile app.

2. Calculate Your Monthly Expenses

Once you determine your monthly income, you will need to calculate your monthly expenses. These include housing costs such as a mortgage payment or rent costs as well as food, gas, insurance payments, and any monthly payments you make for credit cards, personal loans or student loans. Be sure to include monthly subscription services such as Netflix, too. When calculating your costs for food and gas, be realistic. If you currently eat out frequently, you need to include this expense in your monthly budget. Accurately looking through your expenses can help you curb spending habits and save more money in the future.

3. Forecast Seasonal Expenses

Some expenses occur seasonally rather than monthly, but these fluctuating expenses can have major impacts on your budget. For instance, holiday shoppers often indulge and spend hundreds of dollars more than they usually would on gifts. Here in Colorado, the winter months also mean ski season which has its own increased costs like lift tickets and gear repairs. By planning ahead for monthly expenses, it can help you avoid using credit cards to cover the costs and prevent you from increasing your current debt.

4. Create a Spending Plan (and Spend Wisely!)

Once you’ve determined how much money you have coming in and out of your bank account each month, you can decide how to spend what’s left. If you have existing debt, the best advice is to pay it down as quickly as possible to avoid interest charges. Other leftover money could be stashed away as a rainy day fund for unexpected expenses such as car repairs. Opening a savings account can help grow your money through accrued interest.

Interested in learning more about managing your personal finances? Contact Points West Community Bank today!

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