No matter where you are on your financial journey, it’s important to have money saved away.
At Flagstar Bank, we want you to feel empowered and capable of reaching your financial goals. Below are a few tips we’ve compiled to help you get started.
Why Budget?
For many people, budgets are essential to keeping track of finances, paying down debts, and saving for the future. Crafting a budget can give you needed insight into spending patterns, so you can more effectively utilize your hard-earned income. It can also serve as a money saving plan, which ensures you only spend on what you need, so you can save the rest for a larger purchase, retirement, or an unplanned emergency expense.
How to Make a Budget
While there are many kinds of budgeting programs, books, and methods available, each involves a few key components. Every budget must involve your income—all of it, including side businesses and gigs—and your expenses.
Getting Started: Five Ways to Budget
Below is a list of a few of the most common budgeting methods. However, every person’s preferred method of budgeting is different; it may be necessary to experiment with different techniques to find what works best for you.
- Manual: Write down each transaction to weigh against your bank account. Some people use a dedicated notebook, others create a digital spreadsheet.
- Envelopes: Label a series of envelopes with each category of expenses. Then, place an amount of cash in the envelope. When the cash runs out, so does your spending.
- 50 30 20 rule: This method suggests that 50% of your income should go to needs, 30% to wants, and 20% to repaying debt and/or savings.
- Zero-sum budget: This method relies on every single cent being assigned to a certain expenditure, zeroing out your account each month.
- Applications: Many apps make it easy for you to track spending. Some even draw up specific budgeting techniques, while others simply categorize and track for you.
A Few Money Saving Tips
Once you’ve set your budget, there are other complementary ways to save money that can help boost your saving power. Here are five to get the ball rolling.
- Investigate bills: Paying for three streaming services but only use one? Signed up for that newsletter you never read? Cancel unnecessary subscriptions to ensure you’re only spending on what’s important.
- Use cash for problem categories: Research from a study at the Massachusetts Institute of Technology showed that shoppers spend twice as much when using credit cards.1 If you find yourself constantly overshooting your grocery budget, try withdrawing a set amount of cash for the month to use.
- Budget billing: Many utility companies offer a budget billing option,2 which averages your bill based on the past year’s usage to create a fixed monthly payment. Not only will you know exactly what you’re paying each month, but you’ll potentially save on heating and cooling costs at peak season.
- Automate your savings: Many payroll services offer direct deposit across multiple accounts, including savings. This means you can set aside your savings before you even have the chance to spend. Check with your employer to see what’s available.
- Keep at it: If you’re struggling to stay committed, you may need to reevaluate your mindset or method. Remember that budgets are designed to work with you—not against you—so don’t be afraid to be flexible and change things up until you find what works best for you.
No matter what you’re saving for, we’re in your corner.
At Flagstar Bank, you’ll have a banker by your side to guide you in any saving endeavor. We can tailor your money budget to your needs, and provide money saving tips you may not discover on your own.
