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The Smarter Way to Budget


As we wrap up Financial Planning Month, we want to shed some light on a word most people hate: budget.

Many of us skate by without knowing how much money we're spending or where our money is going. Too many people think of a budget as a punishment, a hassle, or a diet (something temporary until you see results). A budget is not any of those things. It's a lifelong tool that sets you up for happiness and success!

A budget doesn't need to be a scary math formula with spreadsheets and graphs galore. It can be as simple as this formula: 50/30/20.

50% of your income can go toward "needs."

No more than half of your income should go towards rent, utilities, transportation, and food.

Housing should make up 33% of your budget at most. If your rent or mortgage is more than 33% of your income, you need to reconsider your housing situation. Do you need a roommate? Do you need to downsize? Can you get another source of income?

If your utilities, food, and transportation are more than 17% of your income, look closely at your bills. Can you set your thermostat to turn off AC or heat while you're at work? Do you need to take shorter showers? Is there somewhere less expensive you can buy groceries?

If you've done everything you can think of to cut expenses but still can't lower this category, there are plenty of resources available to help you. Start with a financial adviser, or check out these community resources available in Pittsburgh.

30% of your income can go to "wants."

Being on a budget doesn't mean you can't enjoy yourself. In fact, this part of your budget is designated for the sweeter things in life! This category is for dining out, gym memberships, phone/internet/cable, entertainment, gifts, and hobbies.

While these things make life richer and more enjoyable, you can absolutely get by without them. If you're spending more than 30% of your income on these optional costs, you need to scale back. Can you find a cheaper gym or work out from home? Yes, Youtube has free workouts! Can you cook instead of ordering takeout? Yes, you probably have ingredients on hand! Can you negotiate with your cable or cell phone providers? Yes, call and ask for a better rate, or try Trim! Can you brew your coffee at home instead of buying it at a coffee shop? Yes, here's how to get the perfect cup!

Remember, treats are more enjoyable when you don't have them every day!

20% of your income should go toward savings.

Using this budget structure, you'll have 20% of your income left to put into a savings account, a CD, a 401k and/or your IRA —  whatever is right for you. It's just important to make sure that money is growing and secure for when you need it in the future.

If you don't have an emergency fund and a rainy day fund yet, this is the perfect place to start! Read our advice on how to get these funds up to speed.You can even open up a Holiday Club Account to start small and save for the holidays so that you don't have to break the bank buying gifts for friends and family. Instead, you'll be prepared.

If you're ready to grow your money, you should look into opening some sort of savings account. All of SSB's savings accounts are interest-bearing, it just depends on what kind of "saving" you are looking to do. For example, we offer Certificates of Deposit (CDs) that will earn you a high level of interest, but will require the money to sit for a longer period of time.

The friendly staff at SSB is happy to help you select the right products to grow your savings!

Of course, this budget can be adapted toward your specific needs. Perhaps you need to dedicate 10% of your income toward medical expenses, or perhaps you don't have to pay for housing. You can adjust the 50/30/20 rule to your situation.

The important thing is that you establish a plan that lets you put as much as possible into savings, has enough flexibility that small fluctuations won't derail your budget, and is something you stick with month after month.

Stop into one of our branches or contact us online to find out how SSB Bank can help you with your budgeting goals!