Proactive budgeting: the perks of planning ahead By thinking ahead and saving for larger expenses little by little, you can minimize mishaps and keep your budget on track.
3 Simple Steps to Prepare Your Personal Budget Plan
- Let’s say your car registration costs about $450 each year. It may sound like a lot, but you have 12 months to save — so you’d only need to set aside $37.50 per month.
- The average American household spends upwards of $1,000 on Christmas. Saving a little each month can help keep you from having to use your “emergency” credit card or dip into savings. With 12 months to save, that’s just $83.30 a month.
- A family membership at the Henry Doorly Zoo costs $165 per year. If you save $13.75 each month, that’s less of a financial impact but the same amount of fun!
Why Do You Need a Personal Budget Plan?
Think about your expenses that may not occur on a monthly basis: oil changes, gifts, travel, car registration, household maintenance, co-pays, taxes, memberships, homeowners or renter’s insurance, or even school clothes and/or supplies. Have you accounted for them in your budget? Proactive saving for these expenditures can take the pressure off your budget and give you peace of mind.
Ready to take a proactive approach to budgeting? Download our Proactive Budgeting worksheet to help you get started.
We hope you found some of our tips helpful! This article is part of the Money Foundation principle, part of UBT’s Five Principles of Financial Wellness Series.
FAQs
Are there any free online budgeting tools or budget planners available?
IFEC provides an online budget planner and calculation tools for you, including a cut-back calculator, savings goal calculator, and retirement planner. Each of these free resources is designed to cater to a specific need, helping you manage and plan your finances more effectively.
What are some common pitfalls peop
Regularly reviewing and making adjustments to the budget plan are often overlooked steps. Unexpected expenses and events may occur, and it is vital to keep up with the changes. Another pitfall is confusing wants with needs. People may have trouble classifying what a necessity is and, instead, overspend on non-essential items, leading to ineffective budget planning.
How can I budget effectively if I live in a shared household or with a partner?
In such situations, communication is the key. Discuss with your partner or housemates and list out all the shared expenses. Decide on what method to use for splitting the costs. If possible, open a shared bank account for the joint expenses while maintaining your own individual account for personal spending.
