Setting Your Budget
1. Create a monthly budget so you can see where you’re spending your money. Write your budget on a piece of paper or start a spreadsheet online so it’s organized and easy to access. Write down the total amount of income you receive monthly in one column and list all your expenses in another column. Start with fixed expenses, like bills, rent, and child care, then list your variable expenses, such as groceries, gas, haircuts, and entertainment. Set certain amounts for your variable expenses so you can still put some of your money aside.
Check your bank statement from the previous month to look at everything you spent money on to help you see what purchases you can cut.
Make a weekly budget if you want to get more detailed and in-depth with how you spend your money.
2. Pay off your bills in full to maintain a good credit record. Look for regularly occurring bills in your budget and make sure they are fully paid. This may include utilities, rent, student loans, credit card payments, or mortgages. Take money out of your income equal to the amount you need for your bills since your credit record will start to go down if you miss payments.
Keep a calendar with all the days your bill payments are due so you don’t forget or miss any dates.
Tip: Ask utility companies if they can offer lower rates or discounts. They may be able to find you deals so they don’t lose a customer.
3. Prioritize money for an emergency fund. You can never predict if you run into car trouble or lose a job, so start putting money into an emergency savings account. Aim to save at $50-100 USD a month if your budget allows you so you can build your fund quickly. Keep saving money until you have at least 3 times your monthly expenses so you can afford to live if something happens.
Don’t pull money out of the emergency fund if you don’t have to. Try to leave it alone as much as you can so your money adds up.
4. Set some of your income aside for a retirement fund. While it’s important to provide for your family, it’s also important to put money aside for your future. Do your best to set aside at least 10% of your income into a retirement fund so you’re able to live comfortably when you’re older. Make sure you can afford any of your other set expenses and bills before putting money into your retirement fund.
Check if your employer offers retirement benefits since they may be able to set aside some of your income into a fund before it even goes on your paycheck. Some employers may also match certain retirement contributions to help your funds grow faster.
5. Look into a college savings plan for your children. Apply for and start a 529 college savings plan in your state so you can start setting money aside for your children. Put a bit of money aside from your income into the savings account so it can build interest and grow over time. The money inside a college savings fund has tax-free growth and withdrawals as long as you use it for your children’s educational expenses.
Ask family members and friends to add to the savings plan as a gift for you or your children so they can use the money for college.
See if you can divert some of your income directly into the savings account before you receive your paycheck so it’s easier to put money away.
6. Avoid relying on credit cards for financial support. Using credit cards repeatedly can lower your credit record if you’re unable to make your payments or if you have a large outstanding balance. Keep a credit card only if you’re able to make regular payments on it and it’s for emergencies. If you already have credit cards, try to pay them off as fast as you can and set them aside so you don’t use them regularly and so you maintain your credit record.