Easy Steps for Beginners to Start Budgeting | Cleveland Bradley County Teachers Federal Credit Union

Whether you only recently started earning income or you’re a seasoned earner, it can be difficult to know exactly where all your money is going when you get that paycheck.

Because it can be so difficult to freestyle your finances, creating a budget is a fantastic way to gain control. While it can be a complex task, here are three first steps you can take to get started on the process:

Know Your Net Income

If you want to create a monthly budget, the first step is to figure out your net monthly income. Without knowing how much money you are taking home every month, it is impossible to know how much you have to work with in terms of your spending.

This simple process requires that you add up your monthly gross income after taxes and deductions are pulled out.

Know Your Monthly Expenses

After figuring out your net monthly income, the next step is to compile all of your monthly expenses. These expenses should include your regular monthly payments like rent/mortgage, utilities, insurance payments, food/dining, gas/car payments and everything else that you pay on a recurring basis.

While this part is not the most fun, it is an important part of figuring out where your money is going.

Try Different Budgeting Methods

Once your income and expenses have been calculated, it is now time to try implementing one of the many popular budgeting methods.

One of the most popular of these methods is the 50/30/20 Method. Simply put, this suggests that 50% if your income goes toward needs (such as housing, food and insurance), 30% goes toward wants (like entertainment, hobbies and eating out) and 20% goes toward savings.

Regardless of which method you choose, it is important to acknowledge that these are only general guidelines—the best budgeting method is different for different individuals.

While these tips are a rough framework to get the budget started, it is a great set of first steps to help you achieve your financial goals. It can be very hard to feel like you’re saving when you don’t know where your money is going. Setting it all out on the table in the open will give you freedom and transparency into your personal finances.

Ready to tuck some money away for future needs or wants? Contact us today to get information about the savings accounts and other banking services that we have to offer.