Think of a budget like a blueprint for building a house. It’s a plan that guides you on how to spend your money wisely, ensuring that you have enough for necessities, savings, and even some fun, for the present and the future.

“Budgeting gives you financial control and helps you build a solid foundation for the future. Having good financial habits can help you improve your credit score, which helps you get better rates for a new car, house, or credit card. Once your finances are solid, this provides a stable foundation for other life goals. Don’t be afraid to ask questions and seek help if you need it,” said Stephanie Martin, Financial Wellness Coach II.

To help you get started, we’ve outlined a few key steps:

1. Calculate your income. Start by figuring out how much money you have coming in. This is like building the outer walls on our financial blueprint. This includes your salary, side jobs, monthly benefits, and any other consistent sources of income.

2. Track your spending. Categorize your expenses into essentials (food, utilities, and rent), wants (for example, subscriptions or dining), savings or debt reduction. This step is like laying out the rooms in your blueprint. 

3. Set your goals. Decide what you want to achieve with your money. Do you want to save for college, a car, a house, retirement, or maybe a vacation? Do you have debt that you want to pay down? Setting goals such as these helps to design the dream features of your house. 

4. An effective way to start this is by using the 50/30/20:

  • Put 50 percent of your income towards needs such as mortgage/rent, insurance, car payments, groceries, utilities, or debt payments.
  • 30 percent into wants such as streaming subscriptions, eating out, new clothes, concert tickets, or vacations.
  • 20 percent goes towards savings such an emergency or retirement fund, or investments.

 If your needs exceed 50 percent of your income, you may need to adjust your plan, but this is a good goal to strive for. It is important to keep these steps in mind when creating your financial blueprint. 

5. Make adjustments.  If you are spending more than you are earning, find areas to reduce or research other ways to increase your income. This might mean less dining out or waiting for a sale to buy something you want. It could also mean reducing monthly subscriptions to streaming services.

6. Stick to your plan. Follow your budget as closely as possible. It’s okay to have occasional purchases for yourself but try to stay on track.

If you’re ready to build a budget that works for you, Greylock’s certified financial wellness coaches can help you get started. To learn more or to make an appointment, please call 413-344-1026.