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Your Bank > Education and Advice > CNB University

A Budget Can Help

B Karley
Barbara Karley is Assistant Vice President, Manager - Pittsford Community Office and can be reached at bkarley@cnbank.com or (585) 249-4980 x41020.

The U.S. inflation rate was a relatively modest 3% in 2011. But that doesn't mean household budgets weren't squeezed by rising prices. Food prices climbed 4.7%, and energy prices were up 6.6%. Gasoline prices alone rose a whopping 9.9% - and that increase came on the heels of a 13.8% price jump the year before. If your household finances have been feeling the pinch of rising prices - or worse, stagnant or falling income - getting a better handle on your budget could help you spend less money or spend money more wisely.

Breaking it Down

Since many bills are due monthly, you'll probably want to set up a monthly budget. Start by projecting your income. Then, using data from the past few months, project your future monthly expenses, breaking them down into specific categories to reflect your personal spending patterns.

Some bills - taxes, insurance premiums, etc. - may be due quarterly, semiannually, or annually. To help keep your budget on course, add these expenses together, divide by 12, and enter the amount in your monthly budget. You won't have to scramble to pay these bills if you save for them every month.

Unless it's a true crisis situation, you probably won't want to spend all the income you have coming in. So include "savings" (for your emergency fund, retirement, etc.) as an expense category in your budget. Finally, make sure your numbers tally: your monthly expenses shouldn't be more than your income.

Keeping Track

Once you have your budget in place, you'll be ready to start using it by tracking your actual spending. After a month, add up the amounts you've spent in each category and compare the totals to your projections. You may have to do some tweaking for a few months to get your spending in line, but it will be worth it. Seeing where your money actually goes is the best way to reach your goal of spending wisely or spending less so you can save more.

Starting Point

Looking for a starting point? Open this budget template in Excel or PDF form.