The concept of budgeting can seem daunting. Not knowing where to start, feeling guilty for overspending, and navigating the different methods are all valid reasons for putting off starting your budgeting journey.

However, budgeting is a vital part of managing your finances.

Why start a budget?

1. Better prepare yourself for emergencies.
2. Anticipate events such as holidays, birthdays, or weddings that require larger expenses.
3. Enjoy peace of mind and less stress surrounding money.
4. Pay down debts and increase your credit score.

How do I start?

1. Spending diary.

• • To get a gauge of your budget, see where you currently spend.
  • Use Money Manager in AAGCU Online or Mobile Banking to easily track your spending. Tag different expenditures by category to see where you are spending your money. You can even link your other financial institutions to track every expense.

2. Set goals.

• • These can be savings goals or goals to pay down debt. Make them attainable with a timeline and an action plan of how to achieve the goal.
    • For example: My goal is to save $1,200 in emergency savings by the end of the year. I will put $100 of my paycheck into my savings account every month.

Once you have a gauge of your spending and you have your goals, you’re ready to build your budget!

How do I build a budget?

1. Determine income.

1. • Add up your net salary (how much you take home after taxes and benefits) with any other sources of income (i.e., spouse’s income, pension, etc.).

2. Estimate expenses.

1. • Separate your fixed expenses (items that are the same each month such as rent, car insurance, and fixed loan payments) and variable expenses (items that change each month such as a utility bill, vehicle expenses like gas, and food).
   • Organize categories for each expense (i.e., food, home, auto). Determine a spending amount in each category based upon your spending diary.
     • Money Desktop has preset categories to make this step easy! 
     • Note, make your budget realistic. Setting an unrealistic expectation will lead to frustration result in not following your budget. If you spent $500 eating out in the past 2 months, don’t expect that all the sudden you will change habits and budget $0.
     • Subtract your expenses from your income to see the difference. If the difference is positive, you are on the right track! You are spending less than you earn. However, if the result is negative, you will need to trim your expenses, so that you don’t spend more than you earn.

3.  Track your spending and stay on budget!

• • • There are tons of methods to track your budget, find a method that works for you.
      • Money Manager in AAGCU Online or Mobile Banking.
      • Spreadsheet.
      • Budgeting Planner.
      • Envelope method.

4. Browse Alaska Air Group Credit Union’s financial education resources to continue to grow your budgeting skills!

Happy Budgeting!