News & Updates

With the recent spike in living costs and rising interest rates, now is the time to start creating a solid financial plan. Understanding how much you earn, your essential living expenses, and your total discretionary spending are key to taking control of your financial future.

Effectively managing your money prepares you for emergencies, improves spending habits, reduces financial stress, and focuses on building wealth. It is important to select a budgeting method that fits your lifestyle and is something you can commit to as you keep track of your budget over time. A good budget will help track your spending and save more of your hard-earned money.

There are several styles of budgeting people can consider. The method you select should include all your monthly spending categories, including fixed expenses (like housing and insurance), estimated variable expenses (such as groceries and gas), and discretionary spending (like entertainment or take-out food). Make sure to list income from your primary job and other side hustles, if it applies to you.

Traditional Budgeting

Make a list that breaks down all your income and expenses using a monthly budget worksheet, or even a simple spreadsheet that allows you to track your monthly income and expenses. This method puts your income and expenses under a magnifying glass, ensuring every dollar has a purpose and helps you reign in the spending.

The 50-20-30 Budget

Also referred to as proportional budgeting, the 50-20-30 budget asks you to split your income into 3 parts to help decide when and what to spend  your income on. 50% of your income goes to necessities, like rent, food, and utilities. 20% pays your financial obligations, like paying down debt or saving for retirement. The final 30% is for non-essentials, like shopping, traveling, or dining out. This method is easy to use and gives you the opportunity to save money for nonessentials budget items.

Reverse Budgeting

This technique prioritizes debt repayment and your savings goals above everything else. With this method, you focus on one big goal each month. Accomplish your goal for the month first with your income, then use the remainder to cover your other expenses. This is the easiest budget method since you don’t spend much time tracking your spending and it can be rewarding to accomplish a monthly goal, but it doesn’t provide much visibility into your spending.

Value-Based Budgeting

This budgeting style prioritizes saving for bigger items. Start by making a list of what matters the most to you, like saving for vacation, completing home renovations, or paying off debt. Pay for essential items first every month, like monthly bills and utilities, then use the remainder towards the items on your list. This method works well if you want to focus on what matters to you but it’s easy to overlook long-term goals, like retirement savings.

Our financial counselors are here to provide free, confidential assistance to help you get on the right track. Evergreen Credit Union is also excited to introduce Money Matters, a series of 30-minute online classes designed to equip you with tips and tools for planning your financial future. These sessions will encourage mindfulness in your financial decisions, making it easier to identify patterns and uncover opportunities for improvement. View the slides from January's Money Matters webinar, Budgeting 101, here.

To schedule an appointment with one of our certified financial counselors, please email [email protected] to schedule an appointment with a financial counselor today.