Household Budgeting 
How should you reconcile your spending so you know how much money you have?
What steps can you take to manage your money better?
How does the average household budget stack up against yours?
How do you budget to pay off your debt?
How should you reconcile your spending so you know how much money you have?
Hopefully, these pages will help simplify the balancing process and hopefully reduce the anxiety level when your bank statement arrives or when you bank online or call our Telephone Banking Line. All these sources will be able to tell you you’re “balance” as well as the last few transactions competed on your account.
MODERN BUDGET TRACKING
Many people find that tracking a budget manually is too time consuming. At Town & Country Bank/Logan County Bank, we can offer you FREE Online Banking that always has updated information regarding your account(s) and you may download your transactions every month into programs like Microsoft Money - so you can track your expenditures. Town & Country Bank/Logan County Bank also has FREE Online Bill Pay that allows you to pay all your bills online. Go online to check out our Online Banking and Bill Pay Demo or to Sign-up for Online Banking.
Seldom will your bank statement, Online Banking, Telephone Banking Line, and checkbook register agree. But, that is no reason to panic. It’s merely a matter of timing.
Your statement, Online Banking and the Telephone Banking Line lists the transactions posted to or cleared to your account as of the closing date. At Town & Country Bank and Logan County Bank “a day is a day”. This means the Bank has implemented a process by which transactions are processed without any mid-day cutoffs. If you make a transaction while the branch is open on Monday, then the transaction will be processed Monday and transpire on your Online Banking and the Telephone Banking Line. Your statement takes a few days to get to you and therefore some transactions on your statement may not be current.
If you prefer to keep a checkbook register, recording each transaction in your checkbook register and adding or subtracting it from the balance is the first step to simplifying the balancing act. It’s important to record the transaction at the time you actually write the check, make a withdrawal, or make a deposit. By recording the transactions and balancing your account total in your checkbook registers, you’ll know exactly how much money you have. And, if for some reason you detect a problem, the sooner you can correct it, the better.
What steps can you take to manage your money better?
The following tips are designed to help you manage your money more effectively.
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Calculate you Net Income. Know all your sources of income after deductions, like income taxes and 401k, are removed. This number ultimately determines what you can spend each month.
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Create a Personal Budget. A budget is your roadmap for spending and is a tool to help you achieve your financial goals. Most importantly, once you create a budget, stick with it. Make adjustments as necessary. Having a budget will allow you to control your money rather than your money controlling you. Check out our page dedicated budgeting clicking here.
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Balance – Know How Much You Have. Using your checkbook register to record and track all transactions, or using Online Banking or the Telephone Banking Line or any combination of the three allows you to know what transactions have transpired on your account and what transactions are still outstanding. Then, you add or subtract (depending on if it is a credit or debit) your outstanding transactions from your know balance – this is how much money you have.
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Minimize Your Use of Credit Cards. Millions of Americans are in debt. Credit card debt is an easy trap to fall into. The best way to avoid this trap is to avoid using credit cards altogether. If you like the convenience of a credit card, consider getting a Visa® Check Card instead. Visa® Check Cards are accepted at most places that accept credit cards. The difference is the expense is automatically deducted from your checking account balance, which reduces your urge to spend more than you have. Be sure to track each check card transaction in your checkbook register, just like you would if you wrote a check.
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Pay Down Your Debt. If you have credit card debt or other debts, pay the maximum to your highest interest rate debts first and the minimum on lower interest debts to pay debts faster.
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Establish Savings. Pay yourself first. When you pay your monthly bills, write a check to yourself and put it in your savings accounts. If you get your paycheck deposited automatically, ask your employer about having a portion of your paycheck deposited to your savings account.
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Know Your Credit History. Credit reporting agencies collect data regarding your credit repayment history and sell this information to lending agencies. If your report shows you are late paying bills, have maximized lines of credit, or have bankruptcies or other collection activities, this will negatively impact your ability to get credit. Check out our page dedicated to learning about the importance of your credit score by clicking here.
How does the average household budget stack up against yours?
Budgets are as individual and personal as income and goals, so it’s impossible to take a list of percentages and make them work for everyone. If you’re goal is to graduate early, you may have a very different budget from someone who wants to open their own grocery store. Guidelines are helpful, but they should never be taken as “rules.”
Nevertheless, there are some broad guidelines that you might want to look at to see how you’re spending stacks up against others. If you’re happy with your budget and it’s far different from this, don’t let it confuse you. If, however, yours could stand a little adjustment, these figures might help you make some decisions.
And, please use the worksheets to help you through this process.
Budget using your “take home pay”: Taxes, insurance and retirement expenses, for middle income individuals, total approximately 30%. Therefore, your total “take home pay” is approximately 70% of your annual income.
Housing and Utilities: If you own (are paying on) your own home, the average is between 32% and 35%. If you are renting, the average is around 20%. These percentages include mortgage or rental payments, home owner’s insurance and taxes, utility services, (water, phone, heat, garbage, etc.) repairs and maintenance.
Transportation: If you own your vehicle outright, you’ll still have insurance, fuel, maintenance, repairs, taxes and licensing. Add loan payments if you’re making them. It all should add up to around 10% of your budget.
Personal and Family Expenses: Medical and care of children or elderly takes a pretty big chunk out of our finances. Include all health insurance (dental, hospital, health, etc.), as well as out of pocket expenses. Add in OTC medications, veterinarian costs, health club memberships and so on. Budget up to as much as 20% of your income for this category.
Living Expenses: Living expenses has to include such varied things as school and work lunches, clothing, postage, paper supplies, groceries, books, and any other item that goes toward you and your family’s upkeep; they are usually “needs”. This can vary from 25% to 35% - pick your battles here. If your budget needs adjustment, there will probably be something here to be cut back.
Recreation: Dining out, movies, gifts, vacations, day trips... anything that’s not included in living expenses; they are usually “wants”. Add liquor and cigarettes here; also any entertainment like attending sports or cultural events. The whole thing shouldn’t be much more than 5% of your budget.
Debt: Include everything you pay on a regular basis that wasn’t paid in any of the other categories. Credit cards, student loans, and any other payments or loan payments go in this budget slot.
Charitable donations: Tithing, “impulse giving” and other charitable contributions, planned or not, belong here. Shoot for 10% to 15% - but this area could be more flexible than the others.
Savings: Include emergency funds, investments of any sort, goal oriented savings (college, new car, etc.) Also include retirement savings/investments. 5% to 10% of your budget should be about right, but it can be as low as 1% and as high as 50%, as long as it fits with your overall goals.
Remember that these are only guidelines. The best budget and one that you’ll be able to live with, is one that you create according to your own priorities and needs.
How do you budget to pay off your debt?
Below are tips to consider when trying to pay down debt.
If you can’t pay cash for it, you don’t need it. One of the first things you have to do before any debt can be eliminated is to STOP USING CHARGE ACCOUNTS. If you continue to use the accounts, you are only continuing the problem, and building on it, not solving it.
Set up a budget you can live with, then follow it. Keep track of all money spent, whether it is by cash, check, credit card, etc. Once you know where your money is going you can take the steps needed to prepare a good budget that you can live with and make huge strides to budgeting your debt away. Determine what’s important. When you prepare to buy something ask yourself it this purchase is in line with the priorities.
Don’t waste. Comb through your budget and cut out the waste. Some of those things you thought you couldn’t live without are draining your money, and may only be conveniences you don’t really need.
Optimize your monthly payment. Pay the maximum amount towards your highest interest rate debts. Pay the minimum amount on all other debts.
Ask for reduced interest rates. Some creditors, especially credit card companies, will reduce your interest rates if you just call and ask. If you receive offers for other credit cards with lower interest rates in the mail, use those offers as leverage when you are re-negotiating your rates with your current creditors.
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