Budgeting 101

You've probably been told that it's important to have a budget, or spending plan, for your money. But why? If you aren’t telling your money what to do, it’s controlling you — no matter how much you make.

Getting in the habit of budgeting and saving is important to financial well-being. Financial wellness can play a major part in your emotional, physical, and mental health. When money is tight, stress begins to pile on.

Budget planning is a great way to create healthy money habits and avoid money stress!

• Why a budget is important
• What are the steps in preparing your budget
• Budgeting resources
• Simple budget categories

Why you need to make a budget today

If you find yourself struggling with your money, you’re not alone. What many people don’t realize is the impact financial struggles can have on mental and physical health.

What does the financial struggle look like?

• Living paycheck to paycheck
• No emergency fund
• Growing — rather than shrinking — debt

Part of Numerica’s commitment to our members is helping you live well, making your financial dreams a reality. Having a budget is the first step.

What are the steps in preparing your budget

Like most things in life, you might not master budgeting on your first try. That’s OK. It takes time and practice, so don’t be too hard on yourself. Over time, you gain a better feel for how much you’re spending in each category. Don’t give up! Follow these steps:

1) Figure out your income

This is the amount you bring home each month. Include all of your income — take-home pay after taxes, side hustles, pensions, child and/or spousal support, etc.

2) Review your bills

Gather all your bills and expenses. Knowing your true costs helps you find places to cut spending, find savings, and be aware of where your money is going each month. Make sure to include both fixed and variable expenses when figuring out your bills.

Fixed expenses are the bills that stay the same each month, like your car payment or rent. Variable expenses can be a bit trickier to budget because they change from month to month. These are expenses like groceries, gas, and eating out. Even though these costs change from month to month, try to ballpark the cost for your budget.

3) Include savings

It's important to pay yourself first when creating a budget. Planning for the future, even if that future is next month, can help you avoid taking out an emergency loan or leaning into credit cards when the unexpected happens.

Looking for a simple way to start? Turn your spare change into savings automatically using Round Up to Savings.

A great initial target for your savings is a $1,000 emergency fund. You always want to be prepared for a personal financial crisis.

Ultimately, try to build your savings to cover 3 to 6 months of living expenses. 

Budgeting resources

Would you like some guidance to put together a spending plan? Help is available. You can use the free Numerica budgeting workbook to figure out your budget. This personalized template is great if you’re not sure where your money is going each month. The workbook includes fillable forms to complete your spending plan.

If you'd like one-on-one assistance building a budget, Numerica partners with GreenPath Financial Wellness to offer free, personalized guidance. 

Whatever tool you use, remember you shouldn’t just “set and forget” your spending plan. A budget is something you continue to check in on and adjust to make sure it's aligned with your financial goals.

Simple budget categories

If you’re looking for the ideal budget, aim for 70-25-5.

This model is called Spend, Save, Share.

SPEND      70%            Needs versus wants

SAVE         25%            Emergency fund, retirement, dreams

SHARE      5%              Community giving makes life better

Numerica: Your partner for living well

Numerica exists to help you live well with your money, including when you're looking for help creating a spending plan. If you have questions, call 800.433.1837 or stop by a nearby branch.