Why should I budget?

• A budget is like a map: it tells you where you are, where you’re going, and what you need to do to get there.
• The better you plan your finances today, the less likely that you’ll encounter problems down the road.
• Having a budget makes it easier to make decisions related to finances; for example, should I buy a new car now, or should I wait until next year?
• A budget also gives you a yardstick against which you can measure your progress toward reaching your goals.

 Aren’t budgets complicated?

• All you need to do is set up a way to estimate your income and expenses, and then compare what you actually receive and spend with what you’ve estimated.
• You can simply write your budget with pencil and paper, or you can use a software package like Quicken to simplify the task.
• When preparing your budget, be honest with yourself; if you typically eat out three nights a week, putting $20 for total weekly meal expenses is unrealistic.

How much should I plan in each area?

• On average, Americans spend 32.9% of income on housing, 13.1% on food and dining, 19.1% on vehicle costs and other transportation, 5.9% on healthcare, and 9.9% on insurance, Social Security and other pensions. (Source: Bureau of Labor Statistics)
• However, everyone’s situation and needs are different.
• Track all of your expenses for three months to better understand where your money goes.
• Remember that expenses such as heating costs will vary throughout the year.
• If any of your categories are dramatically higher than those averages, you may want to re-think your spending habits. 

Is it okay if my budget doesn’t match my spending exactly?

• Generally, yes, because a budget is only an estimate of what you expect.
• In fact, most experts recommend that you underestimate your income slightly, and overestimate your expenses.
• If the actual numbers for items are considerably different from what you budgeted, you may want to consider adjusting your budget accordingly.

If you need help creating a budget, FORUM offers free Financial Accountability Partners to assist you at all FORUM Branch locations.