December 17, 2010

Do you maintain a monthly budget? If you don’t, it might be time to start. Our No. 1 reminder is that a “budget” is not a constraint or a bad thing. A budget can be a great way to help you gain perspective, track where you spend your money, and spend purposefully.

When you outline your monthly budget, start by listing your monthly income and your anticipated monthly expenses, setting a budget for costs such as a mortgage payment or rent, utilities, groceries, auto maintenance and other expenses. Then track what your actual expenses are during that month to ensure you stayed on budget. It helps to balance your checkbook and checking account, and compare it to your bank statements when you receive them to ensure everything matches up. Also, using online banking and e-statements can give you current updates on your accounts and spending to help you budget accurately.

Here are some additional ideas to help you budget successfully.

Give it time

Finding the right budget can take a few months, so it is important that you do not expect to have everything align on your first month. You might miss something or realize you didn’t include an expense category.  After three months, see how things are going. Once you find the right budget, it will be a breeze to follow.

Be realistic

Be realistic about what you actually spend each month. Groceries are one area where people typically underestimate their spending. Save your grocery receipts or track your grocery spending online to see how much you actually spent in that category last month, and start with that budget. Remember that some months might be more expensive than others. For example, $300 for groceries might be fine for a smaller family during regular months, but it might not be during the holiday season. It all depends on your specific situation.

Revise as needed

Chances are you might overspend in one category, such as “dining out,” because it is more expensive than you thought. When this happens, consider cutting back on spending in that category or consider shifting money from another category into “dining out” if you need to.

Don’t forget the irregular

Vehicle registration, yearly checkups and trips to the veterinarian may not be something that you anticipate, but it is wise to build them into your budget when you can.

If you are ever confused about budgeting or don’t know where to start, visit The Callaway Bank. One of our personal bankers would be happy to talk to you!