The new year will be on us before we know it, are you prepared? What kind of goals do you have? Are you trying to learn a new skill, find a new hobby or start an exercise plan? While those all sound like great goals, we should make sure that we all have one goal in common, create a budget, and stick to it! What can a budget help you do? A budget is a great place to start for almost anything regarding money. Whether you're saving for a new car, your first home, or that remodel your house desperately needs, an effective/accurate budget can help you accomplish them in no time. What are some things to take into account when making a budget? Keep reading for a few tips from the saving experts.
What's one of the first things you should do when making a budget? For many, it's why you want to create one in the first place, you want to achieve a goal or save for something particular. Designating a goal and making sure that it's factored in can keep you committed to following through with the plan. A tactic used to make sure you accomplish your goal is to pay yourself first, making sure that your goal is met first at the expense of your monthly disposable income.
Another tip is to really break down your needs and wants. Many of us would admit that we say we need things that we could definitely live without. Whether it's your morning coffee, eating out here and there, or paying for cable. There are much cheaper alternatives that can help you save money each month. By saving more on things you previously considered a "need," it can help you increase your contribution to the ultimate goal.
Another tip we have is preparation for unexpected expenses. If you're new to our content, we're pretty emphatic about having an emergency fund to rely on if anything unexpected happens that could chew up your budget. More often than not, these funds never get used in emergencies and can be converted to savings if they become too large. Commonly, people are advised to have six months of living wages in their fund to cover them if they lose their job, get sick, or another circumstance forces them to no longer have a steady income. How can this help me save for my goal, you say? It won't substantially affect your bottom line each month, but it is essentially there just in case something unforeseen happens and makes it possible for you to stay afloat and get back on track to reaching your goal.
While these aren't our only tips for creating a budget, they are good places to start and valuable tricks for saving for that ultimate goal. We have several tools to help you take on debt, set a savings goal, and even create your budget. To learn more about these tools, visit p1fcu.org/financialliteracy.