Tips to Budget Your Personal Spending and Start Saving

Budgeting is one of the most impactful steps you can take toward achieving financial stability. Knowing how much money comes in and allocating how it goes out alleviates guilty or impulse purchases and keeps you out of debt. Budgeting can help you achieve your most expensive goals - buying a house, going to school, starting a business, having a child or whatever you desire.

As with most good things, creating and maintaining a budget isn’t always easy. Here are some tips to help you through the process.

Record all of your expenses

You need to know where all your money is going before you can start to reorganize it efficiently. Make note of every single purchase, large and small, to help understand your spending habits. You may realize that you could cut back on restaurant dinners or look for free entertainment options.

Budget to zero before your month begins

Look at your take-home pay and categorize every single dollar. The more you account for, the less likely you are to spend money in ways you don’t need.

Create a buffer

Spending your money only on important things is no way to live! Sometimes you may run out of items unexpectedly, or maybe a new movie you’ve anticipated is finally in theaters. If you don’t have a buffer specifically for these opportunities, you’ll start to feel anxious and guilty about spending money on them. Set aside a certain amount in your budget for little extras, both fun and not-so-fun.

Start with the most important items first

Allocate the most money to the things you can’t live without. This includes food, shelter (your mortgage or rent), utilities, transportation and clothing. Look at these areas and try to find ways you can save. Maybe you need to refinance your mortgage or start shopping at a less expensive grocery store. Once you’ve scrutinized the essentials, you can start looking at the fun stuff.

Build an emergency or savings fund

Accidents happen, and it’s always best to be prepared. Set aside a certain amount of your budget each month for accidents, emergencies and unexpected medical bills. Aim for 10 percent of your paycheck.

Pay off credit cards first

Credit card interest saps your money, no two ways about it. Start with the card that has the highest interest, and pay as much as you can (at the very least, the minimum payment on your monthly statement). Also, make sure to pay on time to avoid late fees.

Budget as a couple

If you’re married or in a committed relationship, make sure you and your partner are on the same page when it comes to money. If you have different priorities, one of you may accidentally overspend in a certain category and throw the budget off. Plus, budgeting together can be a nice bonding experience.

Overestimate your expenses and underestimate your income

It’s better to pay less than you expect than to pay more. A conservative approach to your money management will help you in the long run.

Make a schedule for paying bills

Your rent or mortgage should stay the same and are due at the same time every month, while utilities are more flexible. You may spend more on heat or electricity from one month to the next, making it hard to create an accurate budget. When you receive your utility bills, mark the amounts and due dates in a calendar so you know exactly how much you’re paying. Auto bill pay is nice for making sure you don’t encounter late fees (or get your utilities shut off), however, this feature also makes it easy to lose track of how much you’re paying.

Remember that every month is different

Tax season comes once a year and your available funds will go up or down because of it. Similarly, the holiday season tends to be an expensive time, both because of travel and gift giving. Other expenses occur randomly across the year, like your car registration or your annual physical exam.

Use cash for categories in which you overspend

If you tend to break your allotted fun budget (or other categories), opt for paying in cash instead. You can withdraw the maximum amount you’ve set for this category at the beginning of the month or take out a set amount every few weeks. Either way, once you’ve spent all your cash on that category, you can’t withdraw any more — or use your debit or credit cards, for that matter.

Save or invest your extra money

If you’re left with a surplus at the end of the month, try to save or invest instead of spending it. You can treat yourself every once in a while, but it’s better to get into the habit of saving when you can. A little extra money will help your budget during any tough times you encounter later.

Stick to your budget

It’ll take time to get used to your new spending style, and you may slip up a few times, but keep doing your best and it’ll eventually become second nature. Enroll in myTrustmark^® online and mobile banking and use Trustmark’s Financial Tools to create your budget today!