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3 Ways to Budget for Financial Growth

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Don’t have a detailed household budget? A 2013 Gallup poll says you’re not alone—only 32% of Americans consistently keep a budget.

 

Budgeting isn’t just for staying out of the red each month—it’s also an essential tool to increase your long-term net worth and create a plan for the future. So what’s the easiest way to budget? Start with your checking account and try one of these three approaches:

 

Priority-based budgeting
Every payday, your high priority bills such as rent/mortgage, utilities and car payment go out first. You also send a certain amount of money automatically to your savings, student loans or other accounts to pay for groceries, medical bills, etc. What’s left in your checking account is your discretionary income. It’s the most basic and simple system to implement. If your financial institution doesn’t offer automatic bill pay, transfers and online banking, you might want to consider moving your money. The ease and usefulness of these tools is undeniable. Take a tour of Mountain America Credit Union’s mobile app!

 

7-accounts budgeting
Finance blogger Jordan Page of Fun, Cheap or Free, uses a 7-accounts budget. Jordan says, “I think that having only one or two bank accounts can make it harder to keep track of your money.” Her solution is to open multiple family accounts. This way, if you wipe out the discretionary account during the month, you’ll still have cash to pay bills. She recommends opening the following:
 

  • Family emergency savings account

  • Family regular savings

  • Family checking

  • Wife’s checking

  • Husband’s checking

  • Health savings account

  • Slush fund
     

Zero-based budgeting
Income minus expenses = $0. With zero as your goal, you account for every dollar. So if you pay your bills and still have $300, you need to say exactly how that $300 will be allocated. “A good checking account is one of the best ways to create a zero-based budget,” says Erik Finch, vice president of product development and research for Mountain America Credit Union. “Give yourself the accessibility to easily view and modify your budget, set up mobile alerts and know how much is left in a specific category before allocating it.”

 

Remember, living on a budget doesn’t prevent you from spending—it guides your money into the right locations giving you control, confidence and a plan to help your finances flourish.

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