Budgeting

Goods and services bought on impulse today become tomorrow's ghosts that haunt us in our closets, drawers, storage rooms and checking account balances. Creating a solid spending plan and using credit wisely helps you to chart a secure financial future. 

Know when to get help. If your family's budgeting efforts don't bring the results you want, or if your debt seems overwhelming, consider seeking budget and debt counseling. 

Below are budgeting tips from Commonwealth Catholic Charities, an independent nonprofit organization that works closely with the Bon Secours Virginia EAP.

 

Creating a Spending Plan

A spending plan or budget should:

    • Identify all sources of monthly income
    • List all expenses
    • Set measurable financial goals
    • Establish a monthly reserve for periodic expenses
    • Follow the 80/20 rule. This rule involves unsecured credit. Use no more than 20 percent of your net income toward unsecured credit (i.e. credit cards, retail cards, etc.). Drop the percentage down to at least 10 percent, if possible, because of the rising costs of all other categories, and interest rates.

Should I use credit?

    1. Do not apply for more credit than you need.
    2. Once credit has been established, make your monthly payments on time.
    3. Send for a copy of your credit report at least once a year, so that you will be able to know if there are any errors in reporting.
    4. Follow up to correct any problems or errors with the national reporting bureaus.

Advantages to using credit:

    • Wise use of credit helps establish good credit.
    • Credit cards make purchasing more convenient.
    • Credit cards are good for emergency spending.
    • Using credit cards instead of cash does permit you to keep your savings intact.
    • Credit cards allow you to take advantage of sales.

Disadvantages to using credit:

    • Misuse of credit will lead to a poor credit rating.
    • Credit cards can feed the temptation to overspend.
    • Heavy reliance on credit cards can provide a false sense of security.
    • Repayment on credit cards commits future earnings.
    • The cost of the item purchased on sale is normally higher after repayment of interest on the credit card has been added.

Budget worksheets

Get a free personal budget worksheet or spreadsheet from one of the following online sources: Kiplinger.com
Microsoft.com
Bankrate.com
Virginia Housing and Development Authority (VHDA)