How to plan an effective budget

Close up of female accountant or banker making calculations. Savings, finances and economy concept

GRAND RAPIDS, Mich (WOTV) – Creating a budget is an essential first step to taking control of your money. You might be surprised at what you learn. Many discover they’re spending far more than they realized, while a lucky few pat themselves on the back for saving more than they knew. Whatever the case, this is the year to start.

Make it your goal to learn how to spend better which will help you save more.  It’s the right thing to do because saving for some people is what you do with the money that’s left over after spending.  Since spending is what we do most, and spending less is easier than saving more, start here.

You can get a number of budget or worksheet templates online, or you can visit your financial institution’s website and find a sample.  Make sure you customize it for your needs, because finances are personal.

Budget Tips:

  1. Be honest about your budget, make sure it fits your lifestyle and keeps you motivated.
  2. Don’t try to fit your expenses into somebody else’s budget categories. Tailor the categories to fit your own situation.
  3. Make your categories detailed enough to provide useful information, but not so detailed that you become bogged down in trivial details.
  4. Think of your budget as a tool to help you use debt wisely and save money, not as a financial diet.
  5. Update your budget and actual expenses monthly.
  6. Review it monthly and ask yourself these questions:
  • Where is our money going?
  • Do we really need to spend so much on this category?
  • We spent more than expected in this category this month. Why? And what can we do to prevent it from happening again?
  • Are we on track with planning for the big ticket items such as a new(er) car or house?


More Tips:

  • It’s never too late to start. Start with a Financial Assessment – what you spend vs your take home money. Write it down and be honest
  • Debt consolidation may be an answer. Check with your credit union or bank to see if they have a program to help you restructure existing debt.  At Option 1 Credit Union, for example, they have a Money Modification program that helps people restructure existing debt which helps lower monthly payments and allows you to save more each month.
  • Use the tools available such as bill pay services; balance alerts; payment alerts and expense and income graphs that are available in your financial institution’s mobile banking app.
  • Plan to save – even $20 a week adds up to $1,000 a year; start small, but start! Your credit union or bank may have options to help you with your savings. You can establish a variety of saving accounts, similar to an envelope system, only electronic, to help you automatically distribute your direct deposit into the saving categories you’ve established to support your budget and expenses.

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