Beginner’s Guide to Budgeting Your Life

Date: January 25, 2022

Life runs a lot smoother when you have a plan in place. For instance, you make sure you get regular maintenance on your vehicle, you watch what you eat, get the required amount of sleep (most days), and you’re meticulous about booking your yearly physical with your doctor. All of these are VERY important. But when was the last time you had a FINANCIAL check-up?

According to Sarah Ferguson, Westoba Credit Union Virtual Services Manager, “People underestimate the importance of being financially fit. There are a lot of moving parts when it comes to financial fitness: debt management, rainy day savings, retirements savings, budgeting, insurance; the list goes on. They try to manage everything, all while juggling life too.”

So, get into some comfy, stretchy clothes, fill up your water bottle and get ready for a life-changing workout. Don’t worry, no burpees are required. It’s time to work on your financial fitness!

Start by taking the Financial Fitness Quiz to see how financially fit you are!

Westoba Financial Fitness Quiz Screenshot

One of the most important steps in your financial fitness journey is learning to manage your money. Let’s talk about budgeting and how it will enable you to save for the future and live a more financially secure lifestyle overall.

What is a budget and why it is important?

Basically, a budget is a plan that helps you manage your money. It helps you figure out how much money you get, spend, and save. Making a budget can help you balance your income with your savings and expenses.

A budget is important whether you make under $40,000 a year or over $100,000. It’s not just for the frugal or those who are trying to pay off their student line of credit or loan. No matter what your yearly income is—if you are not managing your money and budgeting—you can easily outlive your means.

“A budget helps monitor spending, track expenses versus income, and helps you save money. By using a budget, you are setting yourself up for success,” adds Sarah.

So….do you currently have a budget? Do you STICK to that budget?

5 Reasons why you should create a BUDGET and do it NOW

Jackie Shoemaker, Branch Manager at Westoba Credit Union (Swan Lake and Pilot Mound) says, “A budget is the ultimate financial self-care. It allows you to take control of your expenses and start investing in yourself. A budget helps you get on track, no matter what track that may be.”

1. The “Why”

We all have aspirations. We all have wants. A new house, a relaxing retirement, a new deck, a trip, maybe even a pair of shoes. Find a “why” and it’ll help from tossing money towards every pretty shiny object.

Your why is your financial goal and it can be big or small. When you have a shiny object in your shopping cart, remind yourself of that WHY and it’ll make leaving the item behind that much easier!

“Make sure you have a purpose, your “why” doesn’t have to be a physical item. Financial wellbeing can also be a goal,” states Jackie.

2. Your NEAR FUTURE self will appreciate it

A budget will help you spend only the money you have.

Today, with more and more online shopping, comes increased credit card use; it’s easy to spend a few dollars here and there. Those few dollars you spend today will have your “future self” not very happy at the end of the month when you blew your paycheck on shoes.

Sticking to a budget will avoid such frivolous expenditures and potentially paying extra in interest charges. At Westoba, they have credit card options that fit your life and talk with you about a credit card strategy.

3. Your DISTANT (or not so distant) FUTURE self will appreciate it

You might be a responsible spender. You follow your budget and carry no credit card debt. That’s great, but are you missing something? Are you making monthly or bi-weekly contributions to your Registered Retirement Savings Plan or Tax-Free Savings Account? It may seem like a small sacrifice now, but you’ll be glad you did when you’re enjoying several weekly rounds of golf in retirement.

4. You’ll be better prepared

Like a candle, a spare tire, and an extra pair of shoes in your trunk, you’ll be ready for anything life throws at you. Unplanned expenses like a new appliance, home repairs, your car breaks down, or worse…you lose your job.

Ultimately, you’ll get your WHY. You will have saved up for that down payment on your house, you’ll be set to retire, you’ll build that new deck, or buy those shoes!

So now you know the benefits of having a budget, let’s talk about HOW you can budget.

A step by step guide to creating and sticking to a budget!


Step 1: Take a Deep Breath and Just Start!

The first step to becoming Financially Fit is to simply start budgeting! Sarah says, “Don’t feel overwhelmed by the process – it doesn’t have to be a formal document. Just get started!”

Here’s a great Westoba workbook you can use for organizing your income and expenses.

Download Workbook

This may not be a perfect budget at first, but like life, you will learn as you go. You will adjust as your life changes. And most importantly, you don’t have to do it alone. The experts at Westoba Credit Union can help. Start with getting your free Financial Fitness Checkup.

Step 2: Go back to the future

A. Start with the information that you already know. Look at how you’ve spent money in the last month:
• Rent/mortgage
• Utilities
• Groceries
• Entertainment (streaming services, fast food, etc).

B. Yearly expenses – and don’t forget about expenses like gifts and holidays.

This is a great way to see WHERE you’re spending your money. It’s also a great way to see your spending habits and what habits you can try to cut back on.

Step 3: Categorize

Now that you’ve collected all your statements, let’s organize your spending into categories called your Needs and Wants.

Here is a popular approach we’re seeing when people are looking to navigate their budgeting practices. It’s called the 50/30/20 method (using your after-tax income); take a look at the graphic below to get a better idea on how you can break it down.

Westoba Infographic 50/30/20 Method

If you can lower the percentage of your income going towards needs and wants, and increase the percentage going towards your financial future, that would be even better!

Step 4: Take it all In

Now it’s time to evaluate your needs and wants. Yes, nowadays you NEED a cell phone, but do you NEED the unlimited data plan? If you aren’t going over a certain amount, you could be paying less and paying for what you actually need.

See where else you can cut. Maybe you don’t need Netflix, Crave, HBO and Apple TV.

When you look at the 50/30/20 Method (pictured above), you might have to spend more than 50% of your income on your needs at the moment. And that’s ok…this is your budget, keep your goals in mind as you adjust your budget to fit your life.

A final check: You should be spending less than you earn! If you aren’t you need to consider cutting some needs that may be a want.

Step 5: Work It

You’ve created a budget, congratulations! Now work it and stick to it. Don’t be dismayed if it’s not working right out of the gate, it’s ok to readjust as long you keep moving forward.

STICK to it!

Sarah and Jackie, the experts, both agree you have to be realistic when setting your budgeting goals. If you start to waiver it’s important to not give up. Make changes as you need. Know that month to month things may change because of life changes.

It’s very easy to lose track of the ins and outs. With the help of an expert, they can point out small changes that can make a BIG difference! The team at Westoba Credit Union can help. They are experts at looking at your financial fitness holistically. Meet with an expert for a Financial Fitness Checkup and get a customized plan for you.

Book an appointment

Don’t forget to take the Financial Fitness Quiz, it takes 3 minutes to complete and you can email yourself the results!