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The secret to achieving a level of financial stability is deceptively simple: spend less than you make and save for the future.

While this sounds easy, in practice you may find it difficult — particularly with the ease in which goods and services can be purchased. Instead of looking at a budget as a restriction, think of it as a spending plan and a tool that can reduce the stress of living paycheck to paycheck. A budget can put you in a position to plan for, and confidently afford, the things that will enhance your life — now and into the future.

These four steps can get you started:

  • Determine your monthly income

    If you get a regular paycheck, your take-home pay goes in this slot. If you receive supplemental income or work a side job for additional income, you can include that extra income or leave it out. Including it means you must be confident that the income will continue. If you’re a freelancer or your pay varies month-to-month, use an average over the last six to 12 months.

  • Add up your monthly expenses

    Go back six to 12 months and list the things you spent money on. Separate each item into one of two categories:

    • Fixed expenses. This includes things like housing, car payments, insurance, student loans, utilities, minimum credit card payments and other fixed debts. Most everything in this category should be a “need.”
    • Variable expenses. This is everything that doesn’t fall into the fixed expenses bucket. You may have both “needs,” like food and gas, and “wants,” like eating out, travel and clothing in this category.

    Now you should have a better picture of where your money is going. If you find your monthly expenses are greater than your income, you should look at areas for adjustment. Initially, you may have more control over reducing your variable expenses. But those fixed expenses might be where most of your money is going each month, so while it might take a bit more effort, finding ways to lower those can really help. 

  • Think about your goals

    List your financial goals — both short-term and long-term — and then prioritize them. The goal is to allocate a percentage of your budget excess to your goals. Some goals to aim for include paying off debt, saving more for retirement, building an emergency fund, or saving for a larger purchase like a vacation, car or home.

    Consider the changes you need to make in your spending so you can move toward your financial goals. For example, if one of your financial goals is to increase your emergency savings fund by $500, be realistic on how much you can allocate to that goal and how long it will take you to achieve it.


    When thinking about your financial goals, it’s important not to pause retirement preparation in favor of more immediate items. While you may not find it ideal, many things, like a new car, can be financed. However, your retirement can’t be. So, consider prioritizing retirement preparation.

  • Select your budgeting system

    To give yourself the best chance at successful budgeting, you’ll want to use a system that meshes with the way you think and work. Tactile people may prefer pen and paper. Math aficionados might gravitate to a spreadsheet. For those who are more comfortable with technology, a budgeting app or online tool may give you the most flexibility.

Be flexible

A budget doesn’t have to be the equivalent of handcuffing your spending to prevent you from having any fun. Your financial life will change and evolve over time. Expenses may go down as you pay off debts or make lifestyle changes. Your income may rise or vary month to month. You will likely have new savings goals over time. Give yourself the flexibility to adjust your spending and saving as needed. The key is to stay focused on spending less than you make and be disciplined with your savings goals. Ultimately, you’ll reduce your money anxieties and gain more control over your finances.

OneAmerica Financial is the marketing name for the companies of OneAmerica Financial.


Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. These concepts were derived under current laws and regulations. Changes in the law or regulations may affect the information provided. For answers to specific questions, please consult a qualified attorney, tax advisor, or financial professional.