Help take control of your finances
by creating a personal budget
Having control over your money is important, both for your financial well-being and for your peace
of mind.1 Creating a budget can help you feel more in control of your finances and allow you to save
more money for your short- and long-term goals. The following strategies can help you develop your
personal budget.
Set your goals
Make a list of all the financial goals you want to accomplish over the short and long term. Ask yourself
basic questions about why those goals are your priorities, how you are planning to achieve them
and how quickly you need to see the results. Short-term goals should take no longer than a year to
achieve. For example, you may want to pay off your credit card debt or save up for holiday presents.
Long-term goals may take years to reach. A typical example would be saving for retirement or your
child’s education. Don’t think that your goals have to be set in stone, though. You can update your list
whenever it’s needed.
Learn more about
saving and budgeting
Know your net income
The first step of creating a budget is to identify the money you have coming in — otherwise known
as your income. Keep in mind, however, that it’s easy to overestimate what you can afford if you
think of your total salary as what you have to spend. Remember to subtract your employer deductions
for social security, taxes, 401(k) and flexible spending account allocations when creating a budget
worksheet. Your final take-home pay is called net income and that is the number you should use
when creating a budget.
Make your plan
Start by dividing your net income into two broad spending categories: fixed expenses and variable
expenses. Some of your expenses, such as your mortgage, are fixed because they stay the same
each month. Other expenses, such as gas for your car or entertainment, are variables that change
from month to month.
For both fixed and variable expenses, you’ll want to record how much you spend on each monthly.
You may consider using budget-building software tools or the Household Budget Worksheet to
account for and categorize your monthly spending.
You may also want to divide your spending into three basic categories: needs, savings and wants.
(Continued on next page.)
Visit bankofamerica.com/bankatwork
to watch our five-minute video, “How to
set a budget and stick to it.”
Needs include fixed and variable costs that are essential to your daily well-being.
Savings include your emergency fund, retirement accounts, etc. Wants covers
everything else.
Track your spending
Not sure how much you are spending on variable expenses like groceries or dining
out each month? These expenses can be difficult to track. You may want to try
using a spending journal to help you do some detective work for this type of
spending. Find a small notebook and use it to write down each purchase you make
every day for a month. Other options include saving all receipts and adding them
up at the end of the month or checking your online banking record if you use a
debit or credit card for most purchases. Once you have a good estimate of these
expenditures each month, incorporate it into your Household Budget Worksheet.
Personalize your budget
4 easy steps to creating a personal budget:
The great thing about creating a budget is that you can customize it to your
own needs. After you’ve determined what to set aside for your fixed expenses,
you can alter the amount earmarked for variable items. The variable category
gives you more wiggle room in how much you decide to spend where, allowing
you to prioritize as you see fit. For example, you might decide you can spend
less on clothes each month in order to give yourself more money to save toward
buying a new TV.
1. Record your daily spending with anything that’s
handy, whether it’s with a pen and paper or an app
on your smartphone. Here’s a tip: Bank of America
has a financial planning tool called My Portfolio®
that you can use to track all your accounts.2 To check
it out, visit bankofamerica.com/myportfolio.
Have a monthly check-in
Take a look at your spending every month and compare it to your
Household Budget Worksheet to see how things are going. If you find
that you’re often going over-budget in some areas out of necessity, you
should consider cutting elsewhere to keep things under control.
We’re here to help
C
all 844.528.9675 to speak with a member of our team who
can help you plan for your short- and long-term financial goals.
Prefer to meet in person? Locate a financial specialist near you
to schedule an appointment at bankofamerica.com/bankatwork.
isit bankofamerica.com/bankatwork for additional articles, videos,
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tools and resources to help you with your finances and long-term
planning goals.
2. Plan for next month’s expenses and income
so you don’t get taken by surprise. Make sure to
check in with your significant other before making
the list final.
3. Look for ways to spend less. Small savings can
add up to a lot of money. Adding one small saving
to your budget at a time can surprise you with how
much extra money you’ve accumulated. For example,
try shopping at a cheaper grocery store, buying
generic brands or experimenting with cooking at
home. Visit bankofamerica.com/bankatwork for tips
and more information about saving and budgeting.
4. Find ways to boost your income. Have a hobby
or a talent? Anything from handiwork to writing or
teaching an instrument can be a way to earn
extra money.
1
“Peace of mind” is an aspirational state of mind clients hope to achieve, with no guaranteed results following completion of the Goals Based Wealth Management process since
markets can fluctuate and investments can lose value. Work with your clients to understand how the GBWM process can help to address their concerns, situation and priorities.
2
To view accounts from another financial institution, you must have online access set up with that institution.
Bank of America at Work, My Portfolio, “Life’s better when we’re connected” are registered trademarks of Bank of America Corporation. Bank of America, N.A. Member FDIC.
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