By Andrew Horton
As an Economic Mobility Specialist, I know thinking about money can be hard. Sometimes it can just seem easiest to ignore it completely. But not planning for or thinking about our finances might mean that there isn’t enough to cover the things we really need. That’s why it makes sense to try and come up with a plan, a spending plan/budget, for your money. Especially in these challenging times.
When I meet with customers to come up with a spending plan/budget, the first thing we do is track income. Knowing how much is coming in each month (even if it is not an exact amount), will inform decisions that you make later in the month. One tool I like for this is the Income and Benefits Tracker created by the Consumer Financial Protection Bureau (CFPB).
This tool breaks the month down into weeks and creates a space for you to plug in the income/benefits you believe you will receive and when you think you will receive them. You then add up your income/benefits by week, which you use to find a monthly amount. Knowing how much income/benefits are coming in, and when, is key to creating a spending plan/budget.
Next, we can start keeping track of how you use your money. Many of us use our money in small ways that add up over time and don’t match our priorities. When we track our spending, we are better able to make money choices for the future that match up with our priorities and how we want to be spending our money. The Spending Tracker Tool from CFPB can help you get a handle on where you spend your money.
This tool asks you to keep track for a month, breaking it down week by week. This way you can see not only what you spent your money on and how much you spent, but also when you spent it. Sometimes the timing of our spending matters as well.
Finally, we can take the information you gathered from the Income and Resource Tracker and the Spending Tracker and create a spending plan/budget. The attached budgeting tool is an example of the type of worksheet you could use.
There are many templates on the internet, or a lot of individuals like to make their own. Many even use apps like Mint or Goodbudget. Whatever works best for you is the best method to use. Remember, a good spending plan/budget isn’t meant to be set and then forgotten. Instead, it’s something that you should look at frequently and adjust as needed.
Even if you’ve created a budget before, if your income and/or expenses have changed significantly due to big shifts like COVID-19, you should revisit it. It might seem intimating to get started, but once you do it will become easier. It’s like a muscle that gets stronger with repeated use. The more you use your spending plan/budget skills the easier it will be. In the same way thinking about money can be hard, but the more we think about it the less difficult it becomes.
Andrew Horton is an Economic Mobility Specialist at Crisis Assistance Ministry. He provides one-on-one coaching and counseling for customers, helping them reach their full potential as they work toward financial stability over several weeks.