It’s a Budget!

Blog Author Tyler Baccus

Written by: Tyler Baccus, Application Support Specialist, E-Services

Published: April 20, 2015

Found in: Budgeting, Services

It’s a Budget!

Managing your money and creating a budget can be a time consuming, daunting or maybe even an enlightening task whether you are a newbie or a seasoned veteran. The goal is to give you a visual of what your money is doing and also a better understanding of how you can impact and educate yourself on your finances.

Our budgeting tools can help you do exactly that by planning for a trip, reporting on your net worth or reporting on your cash flow by telling you where your money is being spent; e.g., if you are eating out too often or the weekly Amazon shopping spree is taking away from your savings goals. Whether you are coming up short on a monthly basis in making ends meet or deciding on how to reinvest your expiring certificate accounts, budgets are for everyone regardless of your financial situation. One thing to remember is your budget is a guide – it’s not telling you if you are right or wrong; instead, it is telling you what spending habits and behaviors need to change to make your financial standing improve on your own terms.

Let’s get started – if you are a fan of lists rather than reading, head to the bottom of this post for the consolidated list version.

WSECU has provided budget tools in Online Banking to help you with the tasks mentioned above and more. After you sign in to Online Banking, click on the Budget Tools tab. This opens to Monthly Income and Expenses. You can view a report of your income and expenses by the year, quarter, month, week or day. Take notice that your budget is made up of money coming in (income), money going out (expense), categories, keywords to tag transactions, and lastly, a goal. So to recap what makes a budget:

  1. Income/Expenses
  2. Categories
  3. Keywords
  4. Goals

Before we move on, some of you may have come to the harsh realization that you are in some financial trouble. This is where your goals and action on your part will be the most effective – and by action I mean cutting spending or changing some spending habits as soon as possible. Take a moment and think about a savings or other financial goal you want to accomplish. If this is your first budget, it’s okay to start small and work your way up; for example, saving $5 per paycheck for a year or cutting your coffee spending by 50%. Once you have a goal or two in mind gather every financial statement available to you. If you have Online Banking, go to the Documents tab to view your e-statements. The purpose behind this is to give you a monthly average of your sources of income and expenses. Keep in mind the more detailed information you can find the better.

Next, identify all your sources of income excluding taxes for your monthly income amount; this is also called take home pay or net income. In Online Banking you can find the monthly income amount in Budget Tools under the Monthly Income/Expense at the bottom of the page in the Income Categories section. You will also need to do this for listing your monthly expenses, which you will find crucial as part of the next step. The steps mentioned previously can be done manually, but without some way of actively tracking your expenses as close to real time as possible, it can be difficult just getting started with a budget due to lack of information. Budget Tools in Online Banking already tracks your income and expenses among other programs we support like Quicken and Moving to a digital method will save you time in the long run because the information is already there waiting for you.

Once you have your monthly expenses, break them into two sections: fixed and variable. For the first timers I bet you are asking yourself, “How do I determine which of my expenses are fixed and which are variable?” Fixed expenses are those that stay relatively the same from month to month and are important parts for living everyday life. This could include rent/mortgage, car payments, cable and internet service, credit card payments and trash service. These are not likely to change in the budget. Variable expenses change on a monthly basis, examples would be gas, entertainment, eating out and groceries to start. This category will be important for making adjustments because you have the most control over these types of expenses. In Online Banking Budget Tools most of these categories are already created and configured to auto-categorize your transactions. You can also set spending limits for each category and be alerted if an expense goes above its usual amount.

Next, total your monthly income and expenses. This step is like the moment of truth and will show you where changes need to be made. This step is also done automatically in Budget Tools. Best case scenario is your expenses are less than or equal to your income, preferably less than. However, if your income is less than your expenses, there might be a problem. First double, no, TRIPLE check your math. If it all adds up to the same amount then it is time to make some adjustments. If changes need to be made, they will be entirely up to you to decide. I can tell you to look at your variable expenses as a starting place.

You have a budget. Now what? Review your budget on a monthly basis. Staying on track with your plan is important as well as knowing what you did well and where your next-time opportunities lie. Knowing where you stand financially can be as habitual and easy as checking your Facebook status. If you continue with a budget I can assure you this will not be an exercise of futility, but an exercise of discipline – one that will stay with you a lifetime.

The list as promised:

  1. Gather every financial statement
  2. Identify all your sources of income
  3. Identify all your monthly expenses
  4. Break monthly expenses into fixed and variable sections
  5. Total monthly income and expenses
  6. Make adjustments to your expenses
  7. Review on a monthly basis

Tyler Baccus