Budgeting in the New Year
January 15, 2021
The beginning of the year is an ideal time to think about budgeting. Whether you are making a big life change or re-evaluating your spending habits, it is important to have a solid understanding of your income and expenses. We have included four helpful articles from the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) below. These articles discuss creating a budget; using a bill calendar; living independently; and credit counseling.
Creating a budget is the first step toward financial wellness. The CFPB provides four helpful tools to help you budget your money. This includes both an income tracker and a spending tracker to help you stay on top of your income and expenses; a bill calendar to keep track of the due dates for your bills; and a budget worksheet to pull everything together in one place. Once you have collected and recorded all this information, you can analyze your spending habits and create a savings goal for yourself.
Bill calendars are a crucial piece to budgeting because they help provide organization. The CFPB offers four tips to help you make the most out of this tool. First, collect all your monthly bills. Second, record what each bill is for, in addition to the amount and the due date. One benefit to this process is that you will have a greater ability to spot abnormalities, such as a drastic price change or a change in due date. Third, make sure the calendar is in a place where you will remember to check frequently. One way to make this easier is to set reminders on your phone or computer. Last, track your expenses against your overall budget to ensure that your expenses do not exceed the budget you have put in place.
Creating a budget and utilizing a bill calendar will help you to become more financially responsible and prepare you for a lifestyle of independence. The FTC provides a budget worksheet to help you determine whether you have the resources needed to live on your own. This budget worksheet is also a valuable resource because it lists common expenses that are associated with living on your own – some of which might be initially overlooked, such as renter’s insurance and parking and tolls.
One aspect of budgeting that is typically overlooked is what to do when expenses outweigh income and you find yourself with credit card debt. It is important to understand that there are reputable credit counseling resources available. The CFPB recommends you come prepared with the following questions:
- What services are offered?
- How do you offer credit counseling?
- Do you offer any free educational materials?
- What are your fees?
- Will there be a formal written agreement?
- What are the counselor’s qualifications?
- How do your employees receive compensation?
Asking these questions will ensure that you are aware of the costs associated with credit counseling before you agree to accept help.