Budgeting with a Built-In Savings Plan for Goal-Oriented People

Financial instability is the top cause of unhealthy stress in the U.S.A., leading to relationship problems, depression and other serious health problems (heart attack, high blood pressure and anxiety). To combat this issue, people in every stage of life should be making use of a budget plan to have more productive and smart spending.

Practical Money Skills' website says that although most people do keep a budget, it's more than likely just a mental one without any visual or hard copy cues for us to refer to. This is a common mistake that renders our efforts to save money useless. Fortunately, there's a simple solution! With a notebook, budget sheet, online app or even a colorful graph, you can easily keep track of your spending, avoid over-spending, and begin a savings routine.

To begin, you'll need to calculate your total monthly income, or that of yourself and your S.O. if you share finances with your partner. If you get paid bi-weekly, be sure to double your check amount so you can compare it to your expenses for the month.

Then, list your expenses in categories, from most necessary to least necessary. Of course, your house or car payment will go towards the top, followed by your phone bill, utilities, and any other monthly payments you make. If you get your paycheck direct-deposited or you make salary, you may be able to set up an auto-pay for your bills and get a price cut. It's simple enough and every penny counts, but beware: if there's a possibility that your bank account might hit the $0, this isn't a viable option. You could face some annoying and daunting overdraft fees, which add up quickly.

After that, list your necessities, which usually consist of gas and groceries. This category is for things that you need each month, but there's not a definite cost, or it doesn't come in the form of a bill—it's money set aside for these purposes. You can lump in household items with your grocery list to count for them on your budget. (I made that mistake at first; it can get pretty hefty if you need all of your toiletries and other cleaning stuff all at once.)

Remember to overestimate how much you need, or round up your bills when listing your expenses. It's better to expect to pay more and get a surplus than to overspend. If you have some set bills that you know will be the same every month, you can leave those alone, but as for your necessities or bills that may vary like electric or utilities, you'll want to round up.

Finally, set aside money for savings. I personally save separately for the downpayment on a house I want to invest in next year (which could be whatever you want to save up for, like a big trip or a car), birthday and Christmas shopping (unless you aren't a gift-giving person/Grinch), and an emergency fund in the case that something unexpected happens. This could be for car troubles, a utility fix, or a hotel stay, and is truly a necessary installment in your savings habits that you'll find gives you a certain sense of stability in case anything (like an emergency) were to happen—you won't be stuck between a rock and the cold hard bottom of your empty bank account.

Once you've listed your expenses, add them all up and compare them to your monthly income. Make sure if you have a payment that is bi-weekly (my car payment is $135 every two weeks), you double it for your monthly expenses (I actually spend $270 a month on my car payment). If you have extra leftover you can use that for your daily coffee, dinner out with a friend, an afternoon smoothie, or a new pair of jeans. It's important to find a balance that fits you which also cuts out unnecessary spendage, but still allows for you to have a little treat here or there of something you like, or to do something nice for someone else. No one said budgeting couldn't be fun.

You can reach me directly with any budgeting tips, tricks, or questions, and with anything else you'd like me to write about at [email protected].

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Paper Budget Example/Template

This is the template I used when I started my budget; it's as simple as a sheet of paper and a pen. Add some highlighter for a fun color pop!