Build A Budget That Works For You

Financial trends come and go, and it appears as though one approach to finance that industry professionals have long touted is having a moment. According to Debt.com, 86 percent of the more than 1,000 respondents who participated in the site's annual budgeting survey admitted they budget their spending. That marks a roughly 16 percent increase since 2019.

Each person's budget will be different, but that doesn't mean people need to take wholly unique approaches to building a budget. In fact, a conventional approach to budget-building can help people from all walks of life.

• Determine your net income. The Bank of America notes that net income, also known as "take-home pay," is the foundation of a budget. In the era of direct deposit, it can be easy for anyone to forget how much money they're taking in each month. Salaried workers can determine their net income pretty quickly and easily, while workers who are paid by the hour and freelancers may need to do a little extra work and serve as their own bookkeepers as they try to calculate their net incomes.

• Monitor your spending. Spending habits fluctuate, but some patterns will likely develop over time, and identifying these patterns is vital to building a budget. Individuals needn't wait to track their spending. Log into your bank account and see how you spent money each month over the last six months to a year. This can give you an accurate idea of where your money went after it came in. Monthly utility bills may be constants, but those bills tend to fluctuate depending on the season, so a closer examination can yield what the average cost is. Budgets may need to be tweaked during months when utility bills peak.

• Don't discount the importance of things you want. It's important when building a budget that money is left for more than just bills. Things you want to do like dine out, travel or additional expenses like entertainment should be built into your budget so you can still enjoy yourself and your budget is not blown up when opportunities to have fun inevitably arise.

• Track and tweak. Progress can be tracked and the budget can be tweaked if you're still having trouble saving or your efforts to save are causing issues. Tracking progress allows you to see what is and isn't working, while tweaking affords room to compromise if the budget is proving too restrictive or not allowing you to meet your goals.

A conventional approach to budgeting can help people achieve their financial goals and feel better about their futures.