Professor Pig’s Budgeting Basics

The recent supply chain shortages and price increases have made paying attention to your budget more important than ever. Professor Pig has some tips to help you organize your budget and find new ways to stay motivated so you can reach your savings goals!

Develop a Framework

Your budget should be realistic and support your monthly expenses while being future focused. Creating a framework for your budget is the first step in organizing your expenses and savings goals, and the 50/30/20 rule is a great place to start. Allocate 50% of your budget to essentials, 30% to wants, and 20% to savings and paying off debt. 

Essentials are the largest portion of your budget and include necessary expenses such as housing, utilities, insurance (medical, life, home, and auto), transportation, groceries, and childcare.

The next largest section includes things that are nice to have or your wants. These are often the first things we think of when creating savings accounts, like travel, entertainment, new electronics, clothing, gym memberships, magazine subscriptions, and dining out.

Finally, the last but possibly most important section of your budget is saving and paying off debt. If the prospect of paying off your debt is overwhelming, check out these tips for getting out of debt while maintaining your savings goals. When framing the savings portion of your budget, consider the most important things first, like your investments, saving for retirement, and an emergency fund, then expand it to include larger expenses like home renovations, a wedding, or even an advanced degree!

Set Milestones

Once you’ve set your budget framework, the next step is to set milestones to track your progress. When you see forward movement toward your goals, you will be better positioned to recognize bad spending habits or potential delays and reposition yourself for success. Milestones can be used to adjust your plans as well! You can increase the amounts of your recurring deposits as you are able, like when you receive a raise or a bonus. Best of all, milestones are also excellent opportunities to celebrate your progress! Celebrating your wins, no matter how big or small is a great motivator to keep going.

Designate Accounts

Now that you’ve got a plan in place, log into your SmartyPig account to ensure you have all the necessary accounts ready to go. Create a savings account for each of your saving goals. Label each account in a way that clearly defines its purpose and keeps you motivated. Finally, set up automatic deposits for each account on payday, so you are constantly moving toward your goals.

Revisit Expenses

Take time at least once a year to revisit and evaluate your current expenses. Do you utilize all your digital and print subscriptions? Maybe there are some you genuinely enjoy and others you could likely do without. Are you still paying for a gym membership in the hopes you’ll go back but deep down, you prefer the home and outdoor workouts you started during the pandemic? Have you spoken to your insurance agent this year? Maybe not driving as much over the past year qualifies you for newly discounted rates!

Now you’re ready to set your budget and yourself up for success in the New Year! Track your spending weekly and consider new purchases carefully to ensure they fit within your budget and support your savings goals. Finally, remember to celebrate the milestones you reach along the way!
 

Find Out for Yourself

Don’t just take our word for it. Give it a try. Open a SmartyPig account today and discover why we are one of the top destinations for savings.

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