If you are like most military families, you might be feeling the pressure to keep up with bills and expenses. With a limited income, a budget helps you stay on track with your financesThere are several steps you’ll need to take to establish a budget.
Identify your current monthly income and expenses
To develop a budget that is appropriate for your lifestyle, you’ll need to identify your current monthly income and expenses. You can jot the information down with a pen and paper, or you can use one of the many software programs available that are designed specifically for this purpose.
Start by adding up all of your income. In addition to your regular salary and wages, be sure to include other types of income, such as dividends, interest, and child support. Next, add up all of your expenses. To see where you have a choice in your spending, it helps to divide them into two categories: fixed expenses (e.g., housing, food, clothing, transportation) and discretionary expenses (e.g., entertainment, vacations, hobbies). You’ll also want to make sure that you have identified any out-of-pattern expenses, such as holiday gifts, car maintenance, home repair, and so on. To make sure that you’re not forgetting anything, it may help to look through canceled checks, credit card bills, and other receipts from the past year. Finally, as you list your expenses, it is important to remember your financial goals. Whenever possible, treat your goals as expenses and contribute toward them regularly.
Evaluate your budget
Once you’ve added up all of your income and expenses, compare the two totals. To get ahead, you should be spending less than you earn. If this is the case, you’re on the right track, and you need to look at how well you use your extra income. If you find yourself spending more than you earn, you’ll need to make some adjustments. Look at your expenses closely and cut down on your discretionary spending. And remember, if you do find yourself coming up short, don’t worry! All it will take is some determination and a little self-discipline, and you’ll eventually get it right.
Monitor your budget
You’ll need to monitor your budget periodically and make changes when necessary. But keep in mind that you don’t have to keep track of every penny that you spend. In fact, the less record keeping you have to do, the easier it will be to stick to your budget. Above all, be flexible. Any budget that is too rigid is likely to fail. So be prepared for the unexpected (e.g., leaky roof, failed car transmission).
What if I need help with my budget?
The complex financial world we live in presents a huge amount of confusing information. Each strategy for maximizing your budget comes with a mountain of information and it can often become overwhelming to select the right path.
Each military family we work with is unique. With different goals, opportunities, and challenges, a customized approach is the best way to achieve your full financial potential. The Financial Service representatives at AFBN can help you determine the best methods by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources. Start 2017 off on the right foot by reaching out to one of our Service Center locations for help.
Free Tax Prep and Filing for Active Duty Military
What better way to kick off the new year than with a FREE Tax Prep and Filing by one of our Certified Tax Specialists? We help thousands of military families each year save money on their taxes.