7 Easy Budgeting Tips for Improving Financial Fitness

Setting up a budget and reaching lofty financial goals can seem overwhelming when you are just starting out but Cal Coast Credit Union has 7 Steps to Financial Fitness that breaks each part of the process down into easy to follow actions:


1. Financial Fitness Starts with Gathering Data

Get all of your financial information together so that you know your starting point. You can’t get to your destination without knowing where you are starting. Here are some questions you can ask yourself to get started:

  • What is your Net vs. Gross income?
  • What are your assets and their current value?
  • What do you have in your investments and what are they earning for you?
  • What are your liabilities and what are they costing you?
  • What are your monthly bills (rent, cell phone, streaming services), your variable expenses (gas, groceries, meals out), and your periodic expenses (DMV, annual fees, gifts, home décor and repair)?
  • What is your creditor information, including balance, limit, rate, due date, and minimum payment?


2. Know Your Estimated Cash Flow.

Write down your estimated cash flow based on what you gathered by subtracting monthly expenses from monthly income. Make sure to include periodic expenses broken down into a monthly expense. For example:

  • $1,000 a year for auto expenses = $84 a month
  • $2,500 a year for Gift and Holiday Expenses = $208 a month
  • $1,500 a year for Vacation & Travel Expenses = $125 a month

Are you positive or negative? Think about where your money is currently going and then think about what the term “financial success” means to you. Is your spending helping you be financially successful? Are there ways to decrease expenses and/or increase income? Brainstorming and decision making are important parts of the process once you see your estimated cash flow.


3. Track Expenses 

Really know where your money is going. Track every penny going out the door to gain an awareness of your needs and wants. That $1.00 a day for soda out of the vending machine adds up!

You will need about 3-6 months’ worth of data to really track your habits but do track for at least 30 days. This is probably the hardest step because it does take discipline to track every penny but it is a vital step to becoming financially fit.


4. Set Goals

Set SMART (Specific, Measurable, Attainable, Realistic, and Timely) goals with an amount and a timeframe so that you know when you have reached that goal. Avoid vague goals such as “Save More” or “Reduce Debt” and be very clear about what you want to achieve. Some examples of SMART goals are:

  • “I want to save $1,000 in 6 months to be more secure financially”
  • “I want to pay off my $2,500 balance in full in one year to stop paying 26.99% in interest.”

Have something that you are working toward to make it easier to follow your spending plan. Your spending plan will depend on what your specific goal is. For example, if you are preparing for college, you might want research some specific budgeting tips for college students.


5. Create your Spending Plan

You know where your money goes and have set goals about what you want to accomplish. Use your tracking and goals to create a plan that works for you. Be realistic about what you can do and will do. Here are some categories to include in your spending plan:  

  • Income
  • Emergency Savings
  • Retirement Savings
  • Goal Savings
  • Monthly Expenses (Fixed and Variable)
  • Annual Expenses (Fixed and Variable)
  • Creditor Payments.

Make sure that your bottom line is positive. Live within your income and plan ahead.


6. Stick to the Plan

Follow your spending plan! This is probably the second hardest thing to do after tracking, but a goal without a plan is just a wish. Setting up a plan and not following it won’t help you reach your goals. You CAN make your goals a reality if you follow your plan.


7. Monitor and Change as Needed

Throughout your life, some expenses will change and adjustments need to happen. Make it happen. If you increase one spending category, then you have to decrease something else to live within your income. Always stay aware of your bottom line and keep your goals in mind.

The Financial Coaching team at California Coast Credit Union can help you set up a budget and establish financial goals as a free benefit of membership. Start today and begin your journey to financial freedom!


Additional Resources:

Everything you need to know about Budgeting (article)

How to Create an Accurate Budget