Creating a Budget: Your Path to Financial Prosperity

Posted on: October 2, 2024
As we age and earn more money, a budget becomes even more necessary. It’s essential to ensure you aren’t spending more than you bring in. It’s also essential to help you save for emergencies and higher-cost items like a house, a new car, or a vacation.

At Carter Bank, we understand the role establishing a budget plays in creating opportunities for you to prosper. We know getting started is the most challenging part, so we want to guide you through creating a budget and setting achievable savings goals.
 

I’ve Never Had A Budget

Yes, you have. In the simplest form, it’s an understanding of your spending limit. Remember when you were a kid and would go to a store with five dollars? Using that five dollars as your maximum spending limit would allow you to choose what to purchase by setting a budget.

The basic principle is the same as when you had five dollars as a kid. However, the more money you have can often make it feel less necessary. Or, the more expenses you have can make it more intimidating.
 

Where should I start?

First, you need to assess your income and track your expenses.

Start by calculating your net monthly income, your take-home pay after taxes and deductions. Remember to include additional income sources like tips, child support, or investment returns.

Next, meticulously track your monthly expenses. Your expenses include rent/mortgage, insurance, utilities, food, vehicles, and gas – the things you cannot live without. For fluctuating costs, calculate an average. Don’t overlook annual expenses—divide them by 12 to get a monthly estimate.

Now comes the hardest part—tracking other expenses. Document everything—eating out, hobbies, date nights, all of your expenses. While it may not make you feel good, knowing where and how you’re spending money is crucial.
 

Now What?


You can start planning once you have subtracted your expenses from your income.
If you have zero or a negative number, it’s time to consider ways to reduce your expenses or increase your income.

If you have money left over, you can use our financial calculators to start learning ways to make your money work for you. You can look for one of our interest-paying checking accounts, a savings account, a Certificate of Deposit, or something else. One of our associates will be glad to answer any questions you may have about the different types of accounts.

Once you have completed these steps, you’re on your way to increasing wealth.