Budgeting

Building a Budget

A budget is a plan for your future income and expenditures that you can use as a guideline for spending and saving. Although many Americans already use a budget to plan their spending, the majority of Americans also routinely spend more than they can afford. The key to spending within your means is to know your expenses and to spend less than you make. A good monthly budget can help ensure you pay your bills on time, have funds to cover unexpected emergencies, and reach your financial goals.

To create or rework your budget, follow the simple steps outlined:

  • Add Up Your Income - determine how much income you have
  • Estimate Expenses - keep track of how much you spend for one month
  • Figure Out The Difference - totaled up your monthly income and your monthly expenses, subtract the expense total from the income total to get the difference.

A positive number indicates that you are spending less than you earn - congratulations. A negative number indicates that your expenses are greater than your income. This means you will need to trim your expenses in order to begin living within your means.

Make Saving a Priority

Sit down and figure out what you’d like to save money for – retirement, a house, car, college, dream vacation –and how much it will cost. Then make your plan:

  • Set a timeline for when you’d like to reach your goal.
  • Set a schedule by dividing the total goal amount by the number of weeks, months or pay periods between now and your goal date.
  • Be vigilant by treating your savings contribution just like any other must-pay expense, such as rent or groceries.

Find Money to Save

Here are some ways to find it:

  • Keep track of everything you spend for a week. You might be surprised what you’re buying, and what you can do without.
  • Make purchases with cash. This can help you stick to a budget and avoid impulse purchases. Simply decide ahead of time how much you want to spend and then set aside that amount in cash before you go shopping.
  • Lower your bills. Many creditors will give borrowers a lower interest rate if they’re asked. Also, conserving electricity and gas can make a big difference.
  • Rank your nonessential expenses. Keep the ones you like the best and cut the items on the bottom of the list.
  • Pack a lunch. Or cook more dinners at home. Eating out at restaurants can eat up a lot of money that could be saved.

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Janice Maddox
Literacy Coordinator
One Stop Shop
910 Madison Avenue, Suite 105
Memphis, TN 38163
(901) 448-1601
Email: jmaddox9@uthsc.edu
Skype: janice.maddox3

Christopher Pollard
Literacy Coordinator
910 Madison Avenue, Suite 105
Memphis, TN 38163
(901) 448-2190
Email: mbj846@uthsc.edu