The economic effect of the pandemic has led to stimulus checks, Pandemic Electronic Benefit Transfer( P-EBT), and Advance Child Tax Credit for certain families. How are you managing the extra money coming into your household? Are you proactive or reactive? Did you pay your expenses with the extra money, or are you splurging for something you want? A spending plan can help you manage your finances and tracking your expenses will allow you to know where your money is going.
In teaching financial management classes to the community, participants often indicate they don’t have a budget, but they use their bank app to manage their money. After asking if their bank app has a budgeting/spending plan tool, their response is no. If you are using the banking app after purchase, that is reactive behavior. A spending plan allows individuals to know how much they can spend before making the purchase, which is proactive. When starting a home budget for a family (joint costs), keep to the 50/30/20 guideline. This guideline states 50% of your monthly- take-home income is devoted to needs, 30% to wants, and 20% to savings and debt repayment. For more information and to use their calculator, go to www.nerdwallet.com.
The first step to creating a budget/spending plan is finding a tool that works for you. There are so many tools on the internet, from phone apps to spreadsheets and templates. If you want a list of budgeting apps our clients seem to like or a copy of the University of Florida IFAS Extension Money Management Calendar, email me at email@example.com. Once you choose the budgeting/spending plan tool, make a date with yourself. Set up your ideal environment to pay your bills, whether it’s in your home, sitting at the beach, or in your car. Tools you may need are a calculator, your budgeting tool of choice, checks if you use them, envelopes, stamps for the bills you will mail, access to your online passwords for online bill pay, and anything else that will help you focus.
A spending plan should include your financial goals, determine where your money is going, record your expenses, list sources of monthly income, identify bills and their due dates, and decide whether you are living within your means. Following these steps is the proactive approach to managing your finances. Whichever budgeting/spending plan app or tool you choose, try it for a month. Determine if it works for you. If it doesn’t, try a different one.
If you need assistance in creating your budget, sign up for the Take Control of Your Money Series (TCM). The series is available virtually on Wednesdays at noon. To register, visit https://FRMParks.eventbrite.com.