Your budget is your blueprint for keeping cash flow positive, and for sticking to your saving goals.
If you have a partner, it's essential to have one overall household budget. That big picture is indispensable for having a good sense, based on actual numbers, of where the two of you stand financially, and how you plan to stay on track throughout the year.
Whether or not you have a partner, start your budget by listing all your anticipated monthly expenses. It can be helpful to divide them by how frequently they occur.
For the fixed expenses, such as rent or phone, it's easy to fill in the exact amount you know you'll have to spend. On the other hand, with the variable expenses, like groceries, there is no single amount you'll spend each month. But based on what you've spent in the past, you should be able to estimate a fairly accurate number for most weeks.
The next step is to compare your income to your expenses. In order to achieve (and maintain) a positive cash flow, you may have to adjust some of the variable expenses—which probably means cutting back or cutting some of them out altogether.
You should revisit your budget on a regular basis. Remember, it's there to help you, and it's not written in stone. Adjusting it if your overall household income changes is important.
If your budget changes because you get an influx of cash, maybe from a bonus or an inheritance, you may be tempted to use it to cover increased variable expenses, like eating out, travel, or the newest phone. Certainly using some of the money that way is fine. But it's also a great opportunity to pay down debt or to increase what you're putting away in savings—either in an emergency fund, a retirement plan, or your investment portfolio.
Note: interactive coaches open in a new browser window managed by Banzai, a third-party financial education provider. Peoples Bank does not endorse or guarantee the products, information or recommendations provided by the linked sites. Peoples Bank is not responsible for accuracy, security, content, or services offered by other websites; we encourage you to view privacy and security disclosures of all websites you visit as they may be different than those of Peoples Bank.
Financial calculators are made available as self-help tools for independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
