You Need a Budget — Here’s How to Make One –
If you’re just winging it financially, that can mean missing out on important opportunities to improve your financial health. Start by learning why you need a budget and how to create one that works.

Why follow a budget?
Budgets have many benefits beyond the obvious one of forcing a close examination of spending habits and determining ways to make improvements. These plans also prepare you for emergencies, comfortable retirement, and other financial goals. In addition, budgets prevent you from spending more money than you have so you can avoid excessive debt. All these advantages can add up to the lasting peace of mind that comes with financial stability.

Budget basics
Creating a budget starts with a clear snapshot of your money. Begin by adding up income from salary, investments and other sources. Next total your fixed expenses. These are bills that are about the same each month, such as rent or mortgage, car payments, and utilities. Finally add up variable expenses, which may include entertainment, groceries, clothing, and incidentals.

Now it’s time to do the math. Subtract expenses from income to see where you stand. If the picture isn’t pretty, examine variable expenses first to see where you can cut back, or try to find ways to increase earnings. You’re then ready to set goals such as saving for a home, vacation or an emergency fund.

Budget tips
To make the most of your new budget:

• Consider opening a alternate savings account at a financial institution like HCFCU. Making regular deposits can help you move toward goals.
• Consider investing in payroll deduction share certificates or opening an individual retirement arrangement, or IRA, to reach long-term objectives.
• Keep track of cash spending to see where you can cut back.
• Create goals that are specific, attainable and rewarding.
• Set specific time frames for reaching each goal.

Budgeting can be much easier these days thanks to free tools that make it possible to manage finances from your smartphone, tablet or another device. Here are just a few of these apps:

• Mint: Mint can help you categorize and track spending, provide a way to set goals, and view progress using pie and bar graphs drawn from your accounts and transactions.
• Level Money: Designed for Android- and iOS-powered devices, this app lets you know how much cash is available for the day, the week and the rest of the month, using account links and goals you’ve created.

Lastly and perhaps most importantly, remember that you’re human. If you stray from the spending plan, don’t give up. Acknowledge the error and get right back on track. As time goes on, goals that once may have seemed mere possibilities may appear more attainable, and you can begin to consider reaching for even bigger and better things in the days ahead.

Roberta Pescow, NerdWallet