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Personal Budgeting Series- Part 1: Living Within Your Means

Thursday, June 25 at 08:17 AM
Category: Personal Finance

If you are like most Americans, you may find that you are spending more than you are saving, which can create an endless cycle of debt as a result. We’re all guilty of spending a bit too much money at times and it’s an easy routine to fall into. Luckily, with some careful planning and discipline, you can reverse the cycle of debt and reap the benefits of saving money.

As many financial experts will tell you, the first step to climbing out of debt is to create a personal budget. Creating a budget amounts to examining your income and expenditures in order to determine exactly how much money you have coming in and where that money is going.

1. Question Your Needs and Wants
What do you want? What do you really need? Make two lists – one for needs and one for wants.


2. Set Guidelines
We all have different budgets based on our needs and wants. You may need to make adjustments for a daily coffee fix or your child’s school lunch money, so remember to subtract amounts from other areas if you do.


3. Track, Trim and Target
Once you start tracking, you may be surprised to find you spend hundreds of dollars a month on eating out or other flexible expenses. Cutting back is usually a better place to start than completely cutting out. Be realistic. It will help you to be better prepared for unexpected costs.
This chart shows some rough guidelines on how much of your income should go toward different expenses.  This chart shows some rough guidelines on how much of your income should go toward different expenses. Keep in mind, these are only general guidelines and each individual should adjust the categories to fit their personal needs.  For example, if a young person lives at home with his or her parents, the housing expenses category could be omitted and that percent of money could be distributed throughout the rest of the categories.

 

For budgeting tools, don’t forget to check out www.arvestmoneyskills.com

Got any great budgeting tips? We’d love to hear from you! Send them in via our comment field and we’ll post the best ones!

*Source: Building and Budget - Guidelines- PracticalMoneySkills.com, 2008-2009
 

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Tags: Budgeting, Financial Education
10 Comments
 
 

True, Tried & Tested......great advice for all ages!

 
susan on 6/25/2009 at 4:26 PM
 
 
 
 

Great information. We should all stick to a plan when it comes to spending money.

 
Susan on 6/25/2009 at 10:48 PM
 
 
 
 

I think it is great Arvest is putting this type of information on the website to help people budget their money.  Not relying on credit cards in case of an emergency but relying on your own savings account is something we can all use a little help with.  

 
Emily on 6/26/2009 at 2:24 AM
 
 
 
 

Good "food for thought" for everyone, especially reviewing the spending guidelines. We all need to reflect on our spending from time to time!    THANKS ! 

 
keith on 6/26/2009 at 5:09 PM
 
 
 
 

Carry the largest denominations possible. It's much harder to hand over a Benjamin Franklin for a $4 latte than it is to hand over a twenty. Also, when getting cash for the kids' field trips, lunch money, or sending your spouse for milk and bread, have small bills like ones and fives available, so they will be less likely to pick up unplanned items. Don't forget to ask for rolls of coins, too!

 
Nikki on 6/27/2009 at 7:54 AM
 
 
 
 

My savings account is my safety net for the unexpected things I need to pay--- medical bills for example, I have my savings deducted from my paycheck before I get it and add to the amount I save everytime I get a raise in pay.  I like to leave at least the amount of my health insurance deductible in my savings account but if I don't have to spend it I can accumulate it for what I want. 

 
Debi on 6/29/2009 at 4:39 PM
 
 
 
 

Problem with the chart above is that it equals about 125%. No wonder our society is in debt. My bank reccomends that we spend more than we make.

 
John on 6/30/2009 at 10:34 AM
 
 
 
 

John - Thank you for your post.  The chart above does total 125%, but is not intended to be a comprehensive breakdown of how someone should divide their expenses.  Rather, it is a list of possible categories someone might choose from, but the individual should work on a chart of their own with their own categories and percentages.

This chart shows some rough guidelines on how much of your income should go toward different expenses. Keep in mind, these are only general guidelines and each individual should adjust the categories to fit their personal needs.  For example, if a young person lives at home with his or her parents, the housing expenses category could be omitted and that percent of money could be distributed throughout the rest of the categories.

 
Arvest Blog Admin on 6/30/2009 at 9:05 PM
 
 
 
 

 

Total budget should equal to 100%.  Showing it at 125% implies that we should live outside of our means, which is opposite of the discussion here.  To minimize confusion, why don't we adjust the chart to total 100%?

 
Sun on 7/1/2009 at 8:07 PM
 
 
 
 

Arvest has a great tool on thier Banking on the Net to help you see where you are spending your money.  Under the "Account" tab there are subtabs.  Click on Catagories, set up where you spend your money.  Then go to the screen where you can see your transactions.  Click on each transaction and catagorize it.  Then go to the subtab that says "reports".  Under each catagory you set up will be totals of how much you spent for that month (or any other time frame).

 
Nancy on 7/3/2009 at 10:01 AM
 
 
 
 
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