Expert: Start Now, Start Small, Create Spending Plan To Help Family In 24

Creating a personal budget is a great way to make sure that you are saving as much as you can going into the new year.

Putnam County Extension Agent Michelle Parrott said saving any amount of money is valuable, no matter how little. Parrott said a key part of budgeting is getting a strong understanding of your income and spending habits and making a plan based off of those.

“That’s the most important thing that we try to get at, is do you have any extra in your spending plan where you can set back a dollar or two dollars, or maybe ten dollars or twenty dollars to create that savings account for folks?” Parrott said.

Parrott said one of the biggest mistakes people make when creating a budget is setting unrealistic goals and then getting discouraged when they are not able to achieve them. She said a great way to get started is to put all of the receipts you create in a month in envelopes by category to get a better sense of how much money you are spending on each expense and where you may be able to cut back on certain purchases.

“Once you see kind of where your money’s going and set up some goals, it’s always a good time to, after a month, to look back at those goals and say ‘Hey, yes, this is really working, I can do more,’ or ‘No, it’s really not working, let’s go back and change.'”

Parrott said a spending plan is also critical in protecting yourself and your family in the event of an unforeseen accident or event that may require money to fix.

“If something tragic would ever happen and you need to fall back on a type of savings, if you don’t have a goal or a plan in place, it’s very difficult to sit back one day and go, ‘I need $500, for example, where am I going to get that?’ if you don’t have something already in the works,” Parrott said. “And that’s why it is really so important. So I just encourage folks, if you just say, ‘I just don’t have any extra money,’ that’s ok, start somewhere small. Ten cents. That quarter. That seems a little more doable to some individuals and some families than the larger dollar amount. But whatever it may be, start somewhere.”

Parrott said she prefers the term “spending plan” instead of calling it a budget when managing personal finances.

“Because that way it’s like, ‘What are you spending your money on?’ And that’s kind of the first step,” Parrott said. “And that’s why I like spending plan really kind of better than budget, because I think folks need to sit down, if they don’t already know, and look at, ‘OK, I have $2,000 a month. What am I spending my money on, and where exactly is it going? You know, is it fixed expenses, is it variable expenses, if they are variable what can I do to control those variable expenses to cut back and to be able to save a little bit?'”

Parrott said the best ways to fight inflation with your spending habits are utilizing coupons, sales ads, and especially by making sure that you have a shopping list when you go to the store.

“Don’t go to that store hungry where you’re buying a lot of junk food, maybe that you wouldn’t typically buy, because you want, really, to have all of those things that you need in your pantry if you like to cook and prepare for things,” Parrott said.

Parrott said creating a spending plan allows people to be sure of where their money is going and where they are able to save.