Ready to improve your financial situation? Start with your monthly budget—a powerful tool that reflects your values, adapts to your circumstances, and helps you achieve your dreams.
Creating a budget is simpler than you might think. You can use Excite’s Budget Calculator, a spreadsheet, an app—or even pencil and paper. Here are the basic steps:
- Calculate Your Monthly Income: Add up all your income sources to determine your total monthly earnings.
- List Your Monthly Expenses: Write down everything you spend money on, from essentials like groceries to non-essentials like entertainment.
- Compare Income and Expenses: Subtract your total expenses from your total income to see if you’re in the positive, breaking even, or in the red.
- Refine Your Plan: Make changes as needed to ensure that your expenses do not exceed your income and that every dollar has a clear purpose. You may decide to scale back your spending in certain categories in order to meet your goals in other areas.
As you refine your plan, keep these dos and don’ts in mind:
Do prioritize needs over wants, but don’t cut out all discretionary expenses.
Begin by ensuring your essential needs are covered, such as housing, groceries, transportation, and utilities. You’ll also need to focus on other necessary expenses like child care, insurance, and debt payments. Necessities form the backbone of your financial plan.
However, cutting out all discretionary spending is not a sustainable way to live long-term! Consider the 50/30/20 rule: 50% of your income goes to needs, 30% to wants, and 20% to savings and debt repayment. Try out Excite’s 50/30/20 Budget Calculator to see how the formula works for your income.
Do personalize your savings goals, but don’t neglect your emergency fund and retirement savings.
Set short-term, mid-term, and long-term goals that align with your priorities, whether it’s a family vacation, a down payment on a home, or funding a college education. Excite’s Savings Calculator can help you discover how much your monthly contributions can grow over time.
While developing your personalized plans, don’t overlook these essential goals:
- Emergency Fund – Save three to six months of living expenses as a safety cushion. Excite’s Emergency Fund Calculator can help you decide on your target amount.
- Retirement Savings – Start contributing to your future right away through options such as an Individual Retirement Account (IRA) or a 401(k). Use Excite’s Retirement Calculator to see how much you should be saving in order to enjoy the standard of living you want when you retire.
Do adjust your budget each month, but don’t stress over mistakes.
Review your budget before the start of each month. Expenses fluctuate from month to month—during the holidays, for example—so expect to adjust your spending accordingly. Sometimes you may need to cut back on non-essentials, while other times offer an opportunity to save more.
Remember, learning to manage your money is a continuous journey. Mistakes are inevitable, but don’t let them derail your progress! Make adjustments as needed, and keep moving forward.
Do create a debt repayment plan, but don’t accumulate more debt.
Consistently budgeting to pay down your debt each month is a very effective way to take control of your finances and improve your credit score. You may want to tackle the highest-interest debt first, or focus on clearing the smallest debt balance—whichever works best for you.
While you’re reducing your debt, be sure to avoid adding more. Set up an automatic Bill Payer service to help you avoid late fees and unnecessary interest. Timely payments will also boost your credit score, improving your future financial opportunities.
Do seek help from experts, but don’t ever give up!
If you find it challenging to stick to your budget, check out the confidential, no-cost counseling services available to Excite Members through our financial education partner, BALANCE. Additionally, BALANCE provides a wide range of webinars, tools, and educational resources to help you manage your money.
You can take control of your financial journey if you follow a clear plan, stay committed to your goals, and don’t give up! Excite Credit Union wants to empower you for success in 2025 and beyond. Visit excitecu.org to discover more ways that Excite can partner with you!
