How To Start A Simple Budget


When you think of making a budget, does panic start to slowly rise?  Budgeting can definitely have a bad connotation to it, but if you think about it as a learning tool that helps you become more financially stable, you might give it a second thought.  Budgeting is just telling your money where it is going every month instead of it telling you where it is going.  When you have a budget set firmly in place (and you follow it correctly), you know exactly how your money is being spent.  This causes less financial stress and worry and lets you actually enjoy your money.

If you’ve never started a budget, it may seem like an overwhelming task, but you can actually start a simple budget in five easy steps.  Just read below to find out how to get started.

1) Define Your Goals:

Is your goal to pay off debt quickly?  Is it just to maintain your current finances?  Is it to save for an emergency, special item or trip?  Write down all your financial goals for the foreseeable future and put them somewhere where you can see them everyday.  This will help keep you on track with your budget.  On those days where you feel like you might want to go off track, remember your “why” and stick to it!

2)  Define Your Income:  

Now that we have your goals down and in place, it’s time to tackle the actual budget.  Write down every stream of income your household makes and how often you get paid.  Add all of the income streams up and put that total at the top of your budget.  Now you know exactly how much money you have to work with every month.

3)  Define your fixed expenses:

Fixed expenses are those expenses that you absolutely have to pay every month.  Usually these expenses are the same amount every time, but sometimes they can vary.  These are items like mortgage/rent, utilities, credit card payments, car payments, cable, internet and phone bills.  Add all of these monthly payments up and put the total under your income total.  

4)  Define your discretionary expenses:

Your discretionary expenses are things that change every month.  Figure out how much you need to spend on groceries, gas, eating out, gifts, clothing, savings and other items that may change from month to month.  Write down all the spending categories you need to have every month, and then put down how much you are willing to budget beside them.  Take all those numbers, add them up, and then put the total under the fixed expenses total.  

5) Total your budget:

Subtract the fixed and discretionary expenses totals from your monthly income total.  The total should equal zero.  

If you have a negative number, it’s time to do some tweaking to your budget.  Look at your discretionary expenses.  Can you budget less in some of those categories to get your budget total to equal zero?  This may mean cutting back on coffee runs, eating out or other “fun” things, but in the long run having a financial peace of mind will be worth it.

If you have extra money left over after you have subtracted your expenses from your income, take a look at your goals you defined in step one.  Was your goal to save up for something?  Great!  Put that extra money towards savings.  Was one of your goals to pay off debt?  Put that extra money into a debt payment to speed along the process.  It’s up to you what you do with that extra money, but put it in the budget so that you have a plan for where it goes.  

Congratulations!  You have made a budget.  As you can see, making a budget is really a simple process, and it is a great tool to have in your arsenal.  If you have a plan and stick to it daily, you are sure to win with your finances.

What Makes Us Different

You may have heard the term “credit union” before but didn’t know exactly what it means.  After all, it looks exactly like a bank, how much difference can there be?  As it turns out, while credit unions do some of the same functions as a bank, the business models of both institutions couldn’t be more different.   How?  Keep reading to find out!

The Profit Issue

The biggest difference between credit unions and banks is that banks are for-profit and credit unions are not-for-profit organizations.  Banks exist to make a profit off of their customers and give those large profits to a small group of owners.  Credit unions, on the other hand, take their small profits and give them to a large group of owners (their members) along with many other benefits such as lower fees and interest rates.  So in a credit union, each customer is a member/owner of that institution.  

Local Love

Another difference you may notice with credit unions vs. banks is that credit unions tend to emphasize local relationships and community.  Banks can be very large organizations with branches all over the country, but credit unions are typically found in your community with fewer branches, and they really thrive on the personal relationships that they make through their interactions with their members.  Credit Unions are also notoriously known for giving back to their community and being involved in local causes.  This is because they know their members so well and enjoy helping the community in which they serve.

Member Benefits

Being a member of a credit union gives you much more than a place to hold your money.  Even though there may only be a couple of local branches, credit unions such as WCU offer what is called “shared branching”.  This means that no matter where you are in the USA, if you are near a credit union that participates in shared branching, you can access your account, make deposits or withdrawals and make loan payments.  There are currently over 5,000 credit union branches participating in shared branching.

As mentioned above, another benefit of being a credit union member is that credit unions typically have lower interest rates on loans, lower fees, and higher interest rates on deposits, due to the fact that credit unions give the profits back to the member/owners.  

As a credit union member, you also have access to special discounts through “Love My Credit Union Rewards,” a website that lets you log in and receive exclusive discounts on goods and services that you use everyday–just for having an account!  

As you can see, there are some major differences between banks and credit unions.  Neither are bad options when it comes to your finances, but with a credit union, you gain so much more than just a place to hold your money–you gain a community.

 

We Are WCU – Your Community Credit Union

WCU began as Wolverine Employees Credit Union back in 1948. Since then, the credit union has expanded into what is now known as WCU – Your Community Credit Union. We are open and available to all residents of Morgan and Lawrence Counties, and ready to give them a hand with all their financial needs.

Whether it is low-interest loans, checking or savings accounts or IRAS, WCU has a solution for all your needs. In addition to the usual banking features, WCU has all the benefits that make credit unions different from traditional banks– shared branching, a vast national network of free atms all over the country and much more! As we continue along with our new blog, we will delve into each of these features and what makes them so special.

We are excited to have this new outlet to share information, stories, financial tips and tricks and services we offer! You can expect weekly blogs that will range in topics from personal finance to member and employee spotlights. We hope to get to know our members on a more personal level and share everything we know so that you can have a better financial and banking experience. We aren’t just your credit union, we are part of your community.