While it can be easy to get carried away with your monthly income, it can be a struggle if you are left with insufficient funds to cover expenses. To avoid the insecure feeling that may follow spending too much money, budgeting your monthly income can be an ideal practice for transforming your financial state of well-being.
The Purpose of Budgeting
Are you left with a shortage in your bank account at the end of the month due to your current spending habits? You may be wondering how to pay for housing, food, insurance, health care, debt repayment, and outings without running out of money. Budgeting involves devising a plan for every dollar you have, allowing you to achieve a sense of financial freedom and a life with much less stress. If you are aimlessly spending the amount of money you earn each month, directing a certain amount to particular areas can help.
How to Budget Your Income
When it comes to budgeting money, there are different strategies that can allow you to comfortably set up your finances for success. We recommend looking into different budgeting strategies to find which one best suits your financial situation.
This common strategy can allow you to confidently budget the money you earn:
- Calculate your monthly income
- Allow up to 50% of your income for needs, such as housing and transportation
- Leave 30% of your income for wants, such as eating out and entertainment
- Commit 20% of your income to savings and debt repayment
Sustainable Budgeting Practices
Once you are comfortable with the way you are spending your money, it can be helpful to use a tracking tool. There are budgeting apps that can serve as a resource by connecting with your bank accounts. This allows you to closely manage your finances by tracking the amount you are spending in categories so you can have a closer look at where your money is going.
Do you need help with your finances? Let us know!
Managing monthly income can be challenging. At Camino Federal Credit Union, we are happy to serve as a resource to our members and help them evaluate options that align with their unique needs. You can connect with one of our experts online at caminofcu.org or give us a call at 800-835-3400.