Budgeting for Your Bucket List

January 1, 2019

Budgeting for Your Bucket List

What’s on your list to accomplish this year? Maybe you want to take a vacation or you're planning to make a big purchase. Perhaps you want to get your financial house in order or start an emergency savings account. Budgeting for events like these can help you meet your goals that much sooner. Don’t leave saving to chance - putting away even a small amount regularly is one of the best New Year's resolutions you can make.

Creating Your Budget

If you don’t have a budget, you first need to create one. Start by gathering financial statements and monitoring your spending. You might do this for several months to get a good idea of where your money is coming from and where it’s going. Once you have a solid idea of your expenses and income, subtract expenses from income. A negative number indicates that your expenses are exceeding your earnings and you need to make some adjustments.

Your expenses can be divided into two categories: fixed and variable. Fixed expenses are those that stay the same each month, such as your mortgage or rent, car payments, insurance payments, and cable or internet bills. Variable expenses are the type that will change from month to month and include items like groceries, gasoline, entertainment, and eating out. Adjustments to your budget will most likely come from your variable expenses.

Paying Down Debt

If you have credit cards, your budget should include at least the minimum monthly payments in the fixed category. If you pay only the minimums on all your cards, you'll be paying a lot more in interest than you may realize. By adjusting the budget to cut an expense where possible and adding to the minimum payments, you’ll pay off those card balances sooner.

Some say it’s a good idea to choose the card with the highest interest rate and pay as much of the balance as possible each month until it is paid off. Using this method, you could pay the minimum balance on all other cards until the first card was paid off. Then, move on to the next card. However, the opposite approach may also be rewarding. Paying down the card with the smallest balance first may provide the sense of accomplishment you need to keep going, allowing you to increase the payments made on subsequent cards, like a snowball gathers snow as it rolls down a hill.  

Once your debt is under control, you can focus on building your savings and investments by making a list of what you hope to achieve. It might be an emergency fund, retirement income, or a home renovation.

Tips for Staying on Budget

Financial institutions like RSI Bank offer tools and services that may help you stay on target with your savings goals. Automatic payments make saving regularly something you hardly have to think about. You might want to have a Direct Deposit split into two amounts, one going into checking and the other into a savings account. Or, you could use Online Banking to make Scheduled Transfers from a checking account into your savings account.

Keep in mind that a budget will change over time as your needs change. At the end of each month, look over what you’ve spent to confirm it matches up to your budget. If it doesn't, you may determine whether you need to work harder to stick to your spending plan or if your budget should be reworked to reflect your actual spending. A good budget is always evolving!

Another idea to manage spending is to withdraw enough cash to last only for the week. If you pay for most things with cash only, it may help keep your spending down. Even if you can't always use cash, using a debit card may be better than a credit card to avoid incurring interest charges. 

Try using a Personal Finance Management Tool

RSI Bank has a personal finance management tool to help you track and manage your finances in Online Banking and Mobile Banking - it's called Money Management. Money Management allows users to have a complete 360-degree view of their finances by linking external bank accounts, credit cards, student loans and other debt, real estate owned, and retirement accounts. Add financial goals, budgets and track expenses for a comprehensive tool to help you manage your finances.

Finally, don’t overreact if you go over your budget sometimes. Don’t lose sight of the fact that your savings goal is what is important, not being a perfect saver.

The information provided in this article is meant for educational purposes only and is not advice. Please speak with a Customer Service Representative for specific details on RSI Bank's deposit programs and services, such as Online Banking, Mobile Banking, Money Management, direct deposit, scheduled transfers, and debit cards.