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Many would agree that having a budget in place for their finances would help ensure they have enough money for all their necessary expenses as well as giving them a sense of financial freedom. The term budgeting may give you the same mental reflex as when you hear the word taxes; but instead, we should look at budgeting as a tool on our path to financial peace of mind.

Break Down Your Current Spending

To see your current spending patterns, you will need to look at your spending history. Gather statements from each of your accounts you regularly use, so you don’t miss any expenses. Only focus on one month at a time, but for a more holistic view, it’s best to work back a couple of months for variances in spending month-to-month. Check out the Financial Wellness page for more resources. 

Helpful Tip: It may be easier to print your statements so you can cross items out once they have been accounted for, especially if you use multiple bank accounts or credit cards.

Step 1: Income – First things first, calculate your monthly income. You can’t allocate funds for a budget without knowing the consistent amount of money you’re earning each month. Make sure you don’t calculate this number with variable income. For example, if you typically receive two paychecks per month, make sure you don’t account for the occasional third paycheck you may receive in a month when the paydays fall just right.

Step 2: Necessities – Next, list all the expenses you have to pay each month. These expenses could include rent or mortgage payments, utilities, typical grocery bills, transportation costs, medicines, and minimum payments on any debt owed. You may find the printable chart in Members Managing Debt helpful when creating this list.

Step 3: Leisure – Now, list all your leisure expenses, which are anything you could live without if necessary and are not required to spend money on. These might include subscriptions, hobby expenses, food delivery fees, and cable and streaming services, to name a few.

Step 4: Debt Repayment and Savings – This step is just as it sounds. Notate any funds you typically apply to pay more than the minimum payment on any debt owed or any funds you tuck away into your savings account.
 

Making a Budget Using the 50/30/20 Rule

Now that you’ve categorized your current income, necessary expenses, and leisure expenses, it’s time to plan your future spending and implement structure to your budget using the 50/30/20 rule. The idea of this method is simple: 50% of your income goes toward necessary expenses; 30% goes toward your leisure expenses; and the final 20% is used to pay above the minimum payment amount on any debts owed. If all your debts are paid, the 20% will go into your savings.

If you’ve followed the steps above in the “Break Down Your Current Spending” section, this next step will be a breeze. Remember to look at only one month at a time and total all the amounts in each section. Then take the total from steps two, three, and four and divide each number by the total in step one, your income. These percentages are the current snapshot of how you spend your money. If you’re less than excited about the numbers you’re seeing, that’s okay! The most important thing is that you’re now aware of your current spending and your spending goals and can work to achieve these goals.

Work Your Budget Toward Financial Freedom

Necessary Expenses - If your necessary expenses are above 50%, let’s take a closer look. Just because an expense type is deemed necessary, it doesn’t mean there’s nothing you can do about it. You may only want to take on a few expense types at a time but look at each one individually. For example, car insurance is mandatory; but when is the last time you price shopped with other companies? Sometimes even calling your current insurance company and letting them know you’re price shopping can help save on your monthly payments. Take a similar approach with auto and mortgage rates, especially when rates decrease. See if SCCU’s current Mortgage rates or Auto rates could help you save on your monthly payment or call to speak with an Express Services Associate today.

Leisure Expenses - Everyone prioritizes their leisure expenses differently. Your first step will be to read your list and note any expenses you aren’t utilizing or simply would like to cut. A simple example is a subscription you no longer have an interest in. From here, the process becomes much more personalized. The following are examples and suggestions you can use but don’t be afraid to get creative with your own budget!

• Cycle your streaming services. Rather than paying for every streaming service every month, only pay for one streaming service and rotate which one you’re watching every 2-4 months.

• Buy the grocery store brand over the name brand item. They usually taste similarly, and the savings add up if you do it for your entire grocery list.

• Buy grocery items in bulk like meat, rice, and pasta to save money over time if you have the extra money at the time.

• Wait for seasonal sales to make big purchases. Some holidays are associated with deals like electronics on Black Friday or Cyber Monday, and Presidents’ Day weekend typically has deals on furniture.

• Find a second-hand store near you. Finding an awesome piece at a reasonable price is always a great feeling! At Goodwill, you can usually find clothes, accessories, home décor, books, and puzzles. Habitat for Humanity typically has furniture and larger home appliances. Even some chain stores will sell dented or scratched merchandise on clearance – don’t be afraid to do some research and fix small things yourself to save a few extra dollars.

• Trade services with your friends and neighbors. Rather than hiring a babysitter, see if you can watch your friends’ kids for a night, and in return, they would watch yours a different night.

• Re-imagine your vacations. Prioritize your favorite parts of vacationing and cut costs in the others. For example, if you value experiences, trade in the travel expense and find activities closer to home. If you value traveling, book Airbnb’s with kitchenettes to cook yourself rather than staying in hotels and dining out.


After you’re able to dissect your current spending, learn a financially healthy rule of thumb for spending, and get creative to lower excess leisure spending, budgeting becomes much less daunting. Every budget looks different, but with a little bit of time and a proper approach, you can change the way you see your budget and how you spend to stay inside those guidelines. You can learn more about achieving financial peace here.