Building A Budget

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As young adults, I’m sure we all want to move out some day. We ALL want to have enough money for our futures, our car payments, as well as some extra money for spending, and this is where the dreadful word “budgeting” comes into play. BUT WAIT – it doesn’t have to be dreadful! It’s actually an awesome tool to help keep your money and spending in line.  It will help you stay “in the know” with your finances.

So what does it mean to build a budget? It means knowing how you’re spending your money, so you can make the most out of your income. To make it a little easier, try following these steps:

1. Track your spending for one month


Keep track of ALL expenses and income that you have for an entire month. Expenses would include all of your monthly bills like your car insurance, your rent, or your cell phone bill. It would also include the money you spend on food, going out to the movies or gas. Income would include paychecks or other income you receive on a regular basis.

2. Compare your spending to your income

After a month of tracking your spending, you should subtract all of your expenses from your income. If you have a negative number, it means that you’re spending more money than you have. When you have a  negative number, step number four will be important for you.

3. Find out where you’re spending your money

You’ll need to do this in order to spend differently and save money. By grouping together the things you spend your money on, you can make categories. This will allow you to know HOW MUCH you’re spending in one area. Some banks and credit unions, including Michigan First Credit Union, offer tools to track your spending through online banking. Literally, I don’t have to keep track of my expenses at all. Through online banking and using my debit card, Michigan First Credit Union shows me exactly where I spend my money. As ignorance isn’t bliss, I am happy that online banking shed some light on my situation so I can take better control of my budget. 

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4. Tweak spending where possible

For example, if I notice I’m making $500 a month, but I am spending $200 on food, I can save by eating in more often, cutting my food budget down. Remember to stay realistic; If you normally spend $400 on clothes, don’t expect to suddenly only spend $50. You have to set goals for yourself that you can actually achieve; this way you don’t become overwhelmed. Take baby steps with your budget; you'll get there :).


Once you get in the habit of spending differently, you will (hopefully) have more money. And with any income you have that is left unspent, you can start saving up for whatever your heart desires (including an emergency fund. ;).)

Check out this awesome video I found on Investopedia, digging deeper into the steps included in building a budget. Click on the link above to watch!

So whether you make your own budget or you decide to use online banking to help you create a budget, make sure you actually DO create a budget! It’s an important tool letting YOU know where to save money, and it’ll keep your informed on how much you’re spending :).


Until next time,