Breaking News
More () »

Financial Literacy Month | Making and keeping a budget for a successful future

As inflation continues to rise and the value of a dollar is stretched to it's max, a few simple tips to keep your budget from breaking.

TEMPLE, Texas — As inflation soars for Americans across the country, many are faced with the challenge of spending more than ever while still trying to save money and not break their budget.

Compared to this time last year, Americans are paying, on average, almost $1.50 more for a gallon of regular gas and as costs continue to rise, Moody's Analytics said rising prices are costing U.S. households almost $300 more a month and there's little sign of slowing down.

Lourdes Zuniga, the Executive Director of Financial Health Pathways in Austin, said it's not easy to find a balance sometimes, especially with inflation, but said it can be done.

"It's really about prioritizing expenses, your needs versus wants," she told 6 News. "You have, what used to be the old school, the needs vs. the wants. The needs are what you have to pay and wants are things you don't need but would like."

According to Nerdwallet, finding the right budgeting system is so important and for those that don't know what is right for them, they offer a pretty easy-to-use financial self assessment to get you started. They also offer these budgeting methods:

  1. The 50/30/20 Method - This method allows you to divide our take-home income into three categories: 50% of your net pay for needs, 30% for your wants and 20% for savings and debt repayment.

  2. The Envelope System -Do you need help curbing your spending habits and want to see your money at all times, this method helps to just that. Here, you allocate your take-home pay toward specific categories by placing cash in labeled envelopes.

  3. Pay Yourself First - Nerdwallet offers this method as a way of flipping the script and creating a reverse budget strategy but to be successful you'll have to prepare for it.

  4. Zero-based Budgeting  - This method encourages consumers to use every penny of your monthly income but Nerdwallet cautions against blowing money on a shopping spree. Zero-based budgeting is a method that has you allocate all of your money to expenses, savings and debt payments. The goal is that your income minus your expenditures equals zero by the end of the month.

Zuniga said whatever method you want to use, it's all about making sure you're organized and cautions everyone to stay as organized as possible. She said there really isn't a wrong way to budget as long as you are staying honest with yourself.

"These are things that you make decisions over your life. You are the one who knows what you need and what you want and how to spend that," she explained. "It's about thinking through those issues and those expenses is the best way to do it. There's no right or wrong, I just think it's whatever works for you."

While creating a budget can be daunting, especially when it's not something your used to, it's important for financial health and peace of mind. A 2020 intuit survey of at least 1,500 people found more than 60% didn't know how much money they spent the previous month.

Zuniga said stopping impulse purchases is one way to reel in bad spending habits because a little self-control can go along way.

"You see bubble gum at the check out and you buy it, that's an impulsive purchase. So, having an understanding of how that works and being able to pause and say I'm not going to buy this, I know it's in front of me, but I'm not going to buy it because I'm going to save this, I think when you realize you can do that, a lot can happen for you," she said.

According to Nerdwallet, if you still aren't sure what budgeting system is right for you, that's okay because it's not a decision that must be made overnight.

"If you live within your means and know you’re on track to reach your goals, then tracking every penny is probably overkill," says Catherine Hawley, a certified financial planner in Monterey, California. 

"You don’t need to know that your electric bill was exactly $83.82 last month. You just need to know that you’re kind of within some general parameters, and I think that can actually be a relief to people,” she says.

Paid Advertisement