Identify Income and Expenses
All sources of income should be accounted for when you start the budgeting process. This includes all household income from wages, annuities or any other source of income. Accounting for all income will give you the starting basis for your budgeting.
Once you have accounted for all of your income, you should list your fixed expenses. If you use any online banking services, credit cards or debit cards that list what you have spent, this portion should be simple. Do not overlook car payments, insurance payments or any other payment that is made after you get your paycheck. These are the expenses that would have to be paid regardless; fixed expenses are those that do not vary from month to month.
Getting Down to the Nickels and Dimes
For most people, there are expenses they never think about that occur on a weekly or daily basis. We never think about how much it costs when we grab a cup of coffee on the way to work, a cold drink on the way home from work or go out for lunch with folks from the office. This discretionary spending is often where most of us do not realize how much we spend. To ensure you are budgeting accurately, before you prepare a final budget, track these expenses for a few weeks. This will tell you how much money you are spending that you could ultimately be saving in your Oklahoma Central Credit Union savings account or IRA account.
Putting it All Together
Start by determining what discretionary spending is unnecessary. For example, rather than buying your coffee on the way to work you could make coffee at home to carry with you. These extra funds could be used to pay down your credit card debt, add money to your retirement account using an IRA or a ROTH IRA or you could add the money to your savings account for an emergency fund.
Budgeting doesn't have to be painful nor does it have to be difficult, but it is an important part of taking control of your finances and managing your money. One of the best things you can do is set goals for yourself as part of the budgeting process. Whether that goal is saving money in your retirement account, saving for a down payment on a home or simply having a cushion in the event you lose your job or have an emergency repair on your home. Budgeting makes sense for everyone; without a budget, you often do not understand how much money you are spending on incidentals and how much your actual expenses are running each month.
Oklahoma Central Credit Union offers FinanceWorks™, a free financial management tool available for every member using our online banking tool. We offer a whole range of accounts including savings and retirement accounts, checking accounts as well as a range of loans. Contact an Oklahoma Central Credit Union Member Financial Representative today at 918-664-6000, option 8, or stop by any of our branches and let us help you get your financial future under control.