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Financial Literacy

Budgeting for Your Future

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Friends, it’s that weird time of the year again. We’re in that stretch between the holidays and the summer months. A new year is upon us, so you may be trying to tackle your resolutions or get certain things squared away to start your 2023 off on the right foot. But we know it may be difficult for a number of reasons. If your wallet is feeling the heat from the holiday hubbub, try not to panic. In fact, try to see the glass as half full. It is actually the perfect time to replenish your bank accounts and prep for the summer season! At Highlands Community Bank, we believe there is no better way to do this than with budgeting for the year. This is an opportunity to improve your financial wellness.

So, we created this guide which has everything you need to budget like a boss! Below you’ll find budgeting tips, a monthly budgeting worksheet, and more.

Questions to Ask Yourself While Preparing Your Budget

Building a budget may seem daunting, let alone the concept of budgeting. But remember that the major objective of budgeting is to provide yourself with stronger financial footing for both the day-to-day and the long term. The best way to approach building a budget is to break things down and ask yourself the right questions, such as:

What are my financial priorities?

Start by assessing your priorities or goals. Are you trying to create a rainy day fund or put money away for retirement? Maybe you want to finally purchase that car you’ve been dreaming of. Whatever your goals are, make sure to keep them in mind while building your monthly budget. We recommend that you prioritize repayment of debt and building up your savings accounts so you’ll be prepared for the unexpected.

What is my income?

You’ll want to determine how much money you’re bringing in each month so you can divide it up amongst your budget categories. That is, the amount you earn from your paycheck after taxes. A common mistake folks can make is distributing their net income, as this can lead to a big tax bill come April. If you need help calculating the taxes that should be withheld, you could use this online Tax Withholding Estimator from the IRS or look into working with an accounting firm.

What are my expenses?

Take a stab at pinpointing your fixed expenses. Fixed expenses are immovable like your rent, mortgage payment, water, electricity, car payments, and tuition fees. Add all of these up, and then what’s left over is how much you’ll have left to work with.

Then move on to your variable expenses. These are expenses that change from month to month such as medical co-pays, pet expenses, car repairs, dining out, and personal care expenses. Variable expenses can sneak up if you aren’t careful, so make a list, and do your best to factor them into the budget. Hot tip: Look at the activity on your credit and debit cards over the last month or two to get an accurate read on your typical purchases. You should always leave a little wiggle room to account for any miscellaneous expenses.

What are my needs vs. wants?

Divide your expenses into categories: things that are essential for you to have and things that you want. Be honest and as realistic as possible with how you align your budget. Your needs should be the top priority, but of course, your wants matter too. You deserve to treat yourself every once in a while! The key is to find balance.

What are my debts?

Identify your monthly debts such as credit card payments, student debt, car loans, etc. List the total owed for each debt, plus a minimum monthly payment. Be sure to account for the other items in your budget. Note that in time, you can adjust your payment amounts to reduce debt faster.

How can I make my budget sustainable?

Set your budget by comparing it to your prior actual spending. And factor in fun! Budgeting is meant to be liberating, so do yourself a favor and include those monthly movie tickets or whatever brings you joy. Allocate your money wisely and enjoy these pleasures guilt-free.

Determining the First Steps of Creating Your Budget

Creating your budget all comes down to your personal preferences.

Using pen and paper is a simple, tried and true method for budgeting that many swear by! Putting pen to paper can help you analyze your spending more critically and create your budget exactly as you wish. Although, starting from scratch could be intimidating. Feel free to use the Highlands Community Bank Monthly Budgeting Worksheet below! Download the form, print out a few copies, and begin your budgeting journey!

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