Improve Your Finances in the New Year with One Tool January 5, 2018
With the holiday hustle and bustle behind you, it’s time to sit down and evaluate the past year. If you are looking for a fresh start in 2018, your finances is a good place to start.
Benefits of Budgeting
- Gives you control over your money – A budget is a way of being intentional about the way you spend and save your money. Budgeting saves you the stress of suddenly having to adjust to lack of funds because you did not initially plan how to spend them. It also helps you decide if you want to sacrifice short term spending like buying coffee every day in exchange for a long-term benefit like a cruise vacation or a new HDTV.
- Keeps you focused on your money goals – If you are working with limited resources, budgeting makes it easier to make ends meet.
- Makes you aware what is going on with your money – With budgeting, you are clear on what money is coming in, how fast it goes out, and where it is going to. Budgeting saves you from wondering every end of the month where your money went.
- Helps you organize your spending and savings – By dividing your money into categories of expenditures and savings, a budget makes you aware which category of expenditure takes which portion of your money. Budget also serves as a reference for organizing your bills, receipts, and financial statements.
- Makes you decide in advance how your money will work for you.
- Enables you to save for expected and unexpected costs – Budgeting allows you to plan to set aside money for emergency costs.
- Enables you to communicate with your significant others about money – If you share your money with your spouse, family, or anyone, a budget can communicate how you use money as a group. Budgeting teaches family members spending responsibility and accountability.
- Provides you with an early warning for potential problems – When you budget and take a “big picture” view, you will see potential money problems in advance, and be able to adjust before the problem appears.
- Helps you determine if you can take debt and how much – Taking debt is not necessarily a bad thing if the debt is necessary or you can afford it. Budgeting shows you how much a debt load you can realistically take without being stressed or if taking the debt load is worth it.
- Enables you to produce extra money – In budgeting, you get to identify and eliminate unnecessary spending like late fees, penalties and interests. These seemingly small saving can add up over time.
The Financial Management tool within online banking can help you monitor where your money is going each month. This is especially handy if you an avid user of debit cards, online bill payment and online transfers. Check out this quick video on how to set up your budget using the Financial Management tool:
Not sure what categories to set up? Here is a list of common budget and financial management categories:
- Predictable bonus
- Expense reimbursements
- Rental income
- Interest earned (on accounts, loans to others)
- Dividends and capital gains
Leisure (daily / non-vacation)