Using a monthly budget to keep track of your spending can be a helpful tool to show you where your money is going and help keep you on target to reach your financial goals. A budget can also give you a better visual of what you can actually afford, and areas where you can or need to cut back. The goal is to keep expenses under what you earn.

Patterson State Bank is here to help you put your budget together and reach your financial goals with these steps.

1. Figure Out Your Income

The first thing you need to do is determine your monthly take-home pay amount. If that amount fluctuates, look back at the past few months and use the lowest amount or take an average of your income over the past three to six months. Adjustments can always be made later for months where you get an extra check.

2. Make a List of Your Expenses

The next step is figuring out your monthly expenses. Your PSB monthly statement, PSB Online Banking, and statements for any credit cards you have are great places to begin when gathering this information. Start with your fixed monthly expenses, like mortgage/rent, car payments, childcare, and other recurring monthly payments.

After listing out your fixed expenses, you’ll want to list your variable expenses—things like gas, groceries, utilities, and entertainment. For each of these items, you can take an average of what you spent over the past three to six months. Variable expenses can even be broken down further into essential and non-essential categories, which can be helpful when looking for places you can cut back.

3. Compare Your Income Vs. Expenses and Set Goals

Tally up your monthly income and your monthly expenses to compare the two. This will give you a clear picture of how much money you’re earning and how much you’re spending. From this information, you can set attainable goals and review your expenses to find places you can cut back to reach your goals.

4. Stay on Track

With your goals in mind, keep track of your monthly spending based on the expense categories you have in place. PSB’s Online and Mobile Banking are great places to help keep up with your spending. Make adjustments in your spending when necessary to stay on track with your goals. You may even consider ways to reduce costs on your fixed monthly expenses if cutting back on flexible spending isn’t enough.

5. Review Your Budget Regularly, and Adjust When Necessary

Review your budget each month and make any necessary adjustments for things like income changes, expense changes, or goal changes. A regular review can help you stick to your plan and reach your goals.

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