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We all know budgeting can feel overwhelming. Talking about personal finances can be uncomfortable and can keep many people from seeking help or stop them from budgeting altogether. If you have unanswered questions about budgeting, you’re in the right place. We’ve researched and collected 50 of the most common budgeting-related questions below. Keep reading for answers! 

Budgeting

What is a budget?

A budget is a way to track your income and expenses. Budgeting can be helpful if you’re trying to save money or pay off debt. You can budget for a specific time period, such as monthly or yearly, or budget on an ongoing basis to keep track of your income and spending habits.

What is the best way to stick with a budget?

The best way to stick with a budget is to set achievable goals for yourself—these could be short-term goals (e.g., “save $30 this month”), long-term goals (e.g., “pay off my credit card debt by the end of next year”), or a mix of both! Write your goals down and remind yourself of them anytime it starts to feel tough. 

The best way to be successful with a budget is to make sure that you are spending less than what you make. While this may be oversimplified, budgeting is all about spending responsibly, living within your means, and planning for the future.

What apps can I use to help with my budgeting?

There are countless budgeting apps available that can sync with your bank accounts and help you set up and stick to your budget. Curious which one is the best? Don’t worry, we’ve done the legwork for you. Check out this post: Best Budget Apps: The Top Money Management Tools.

Where can I read more about budgeting?

The budgeting process can feel complex, but learning more about budgeting basics is the best way to begin. A great first place to stop is the CreditAssociates blog. These articles might also be a good place to start:

If you have a specific question, Google can also serve as a great resource for budgeting help. If you’re looking for more information on using budgeting to help pay down debt, we offer free, personalized debt evaluations with our certified debt consultants. 

How can I keep myself accountable with a budget?

One way we recommend to keep yourself accountable with budgeting is to use a budgeting app. It can be easier and quicker to help track your spending, show you where expenses are coming from, and help you plan for future purchases.

What should I take into account when budgeting?

At the most basic level, you should take your income and expenses into account when budgeting. You may need to budget for savings and debt repayment. No matter what you’re budgeting for, the overall idea of a budget is to make sure you’re not spending more than you’re bringing in.

Does it cost anything to make a budget?

Making a budget is free, but if you choose to use a budgeting app it’s possible that there could be a fee associated with using one. 

When should I start my budget?

A lot of people find it easier to start their budget at the beginning of a new month. However, we recommend that you start your budget as soon as possible to help you make the biggest impact that you can, as fast as you can.

How often should I review my budget?

We recommend reviewing your budget at least once per month. This budget review should be more of a check-in, rather than an exhaustive budget review. After one big budgeting update, you can make some tweaks along the way if needed.

How often should I update my budget?

We recommend updating your budget whenever you have a change in income or expenses. This budget update could be as simple as logging in to your budgeting software or even just updating it in a notebook with pen and paper.

What should I use to track my budget?

Typically people will either use a spreadsheet or a budgeting app to create and track their budget. We recommend using whichever method you feel more comfortable with as that comfort level will make you more likely to succeed with your budget.

What should I do if my budget isn’t working?

If your budget isn’t working, it could mean that your budget is not fully tailored to meet your needs, and it may need some adjustments.

What is incremental budgeting?

Incremental budgeting means budgeting for smaller chunks of time. For example, instead of budgeting for a month at a time or six months at a time, incremental budgeters will budget by week and then aggregate that weekly number into the larger time frame they are looking to budget for (monthly or yearly). If you’re having trouble staying motivated or sticking to your budget, you could find it helpful to focus on one week at a time.

Expenses

What is an expense?

In a budget, an expense is anything you spend money on. This can include groceries, gas for your car, utilities, rent, clothing expenses, and more.

How can I include unexpected expenses?

One way to include unexpected expenses in your budget is to create a “flex category” that can be used to help cover any unforeseen expenses that come up.

How do I budget for one-time expenses?

If you know that you have a large, one-time expense coming up, add it to your budget so that you’re able to keep track of it. If you know far enough ahead of time, you could spread the expense out over several months. Setting aside a little bit each month for this large expense could help it be more manageable when the expense is due. 

Why do people impulse shop?

People typically will impulse shop because they are focused on their short-term wants over their long-term needs and goals. Budgeting could help you avoid impulse buying by helping you set goals and giving you a plan.

What expenses are tax deductible?

When looking at your expenses, certain ones can be classified as tax deductible. Most common expenses that are deductible include: medical and dental costs, interest paid on a home mortgage or student loans, charitable donations, and job search expenses.

How can I budget for large expenses?

We recommend building any larger expenses out over several months or years to help budget for that expense and avoid feeling too much strain. Saving up over time could also help you avoid going into debt (putting the expense on a credit card or taking out a loan) to purchase the item.

What expense categories should I include in the budget?

Some core categories that you should consider including in your budget are: housing, utilities and other bills, food and groceries, transportation costs (e.g.., gas), clothing budget, medical budget (for insurance premiums or out-of-pocket expenses), and savings.

What can I do to decrease my expenses?

The first step in decreasing your expenses is to track them. Once you know how much you’re spending and where it’s going, see what you can cut out or cut back on. For example, if your monthly food bill looks high, consider dining out less or looking for ways to save money on groceries. Having a budget is a great way to track your expenses and make adjustments to your spending habits. 

What are the average expenses for a household in the U.S.?

In 2019, the Bureau of Labor Statistics found that the average annual household expenses were $63,036 or 76% of total income

Income

What is income?

In a budget, income refers to the amount of money coming into a household.

How can I increase my income?

Your income can be increased by working overtime or getting a second job. You could also consider doing freelance work, selling things you no longer use or need, applying for grants/scholarships, etc., which would give you extra cash flow.

What income categories should I include in a budget?

When including categories for income in a budget, you should consider your primary source of income, any secondary jobs, dividends from investments, rental income, etc.

What is the average income in the U.S.?

The Bureau of Labor Statistics found that in 2019 the average household income before taxes in the U.S. was $82,852

What side jobs can I do to increase my income?

Some side jobs that could increase your income include: delivering food/groceries, working as a dog walker, or babysitting/nannying on the weekends.

What are income brackets?

Income brackets are groups of people divided by their income for tax purposes. Basically, income brackets are a way to determine how much you should pay in taxes based on your salary.

Is my income different from my salary?

Your salary will typically be viewed as a pre-tax number, while income will generally be viewed as your post-tax number.

Saving

What is saving?

Saving is setting money aside and committing to not spending it. Usually, people put money in a place where they can’t easily touch it to reduce temptation. This could be putting the money into a savings account, investing in stocks or bonds, buying physical assets such as gold or silver, etc.

What savings goals should I have?

The goals you set should be dependent on what you’re saving for, including how much you need to save and when you need to save it by. For example, if you know that in five years’ time, you will need to buy a car for $20,000, then it makes sense to start saving now with this goal in mind. You could add a line item for “car” to your monthly budget and save the money up over time at a monthly amount that works for you.

How can I track my savings goals?

A great way to track your savings goals is to keep a budget and track your savings progress within that budget. You can also create a log that tracks how much you’ve saved toward a goal and how much you still need.

How much do I need to save for retirement?

When planning for retirement, you need to determine roughly how much you will spend each month when you are retired and at what age you will retire. This can help you estimate how much you need to save for retirement.

How much should I save for emergencies?

When planning for emergencies, it is best to be prepared for the worst. If you have no emergency savings, it cannot hurt to save at least $500–$1000 in case of an unexpected expense that could derail your budget or finances. Read more here: How Much Money Should You Have in Savings?

What is the best way to save money?

The best way to save money is to budget for it. You could budget a percentage of your income into savings, and then save that money in a single “savings” account or separate accounts based on its intended purpose (vacation fund, emergency fund, etc.). Read more here: Savings Account Definition: What It Is & How It Works.

Why don’t people save?

People struggle with saving because it requires discipline and planning to create a budget, figure out how much to save, and how to stick with their plan. 

Investing

What is investing?

Investing is when you choose to put your money in a financial investment that will earn you interest or profit. This could come in the form of stocks, bonds, or real estate.

How can I invest?

There are many different ways that you can invest your money. For example, you could buy stocks through a broker or open up an investment account of your own that you could manage yourself.

What is diversification?

It’s important to note that investing involves a certain level of risk; sometimes the markets do well, and sometimes they don’t. Diversification, then,  is when you invest your money in multiple types of investments to balance out that risk. Diversification is important as it protects you from losses: if the value of one type of investment goes down, investments in other areas could prevent you from losing all of your invested money. 

How do I know what stocks to buy?

Research is key when investing in stocks. Look for a company that you think will do well and read through their financial records so that you understand the health of the company.

How much money do I need to invest?

There is no minimum to invest. However, it may be difficult to diversify your investment portfolio with very little money. A good rule of thumb is to have at least $500 in order to diversify your stocks across different companies.

Can I invest on my own?

Yes. While there are many different ways to invest, owning stocks can be a lower risk way that you could manage on your own as long as you research the company and carefully monitor its progress. There are many investment companies that allow you to trade stocks for a fee. 

Debt

What is debt?

Debt is when you borrow money from someone else. This could be in the form of a loan (personal, home, auto, student, etc) or a credit card/line of credit.

How can I reduce my debt?

Reducing your debt could be achieved by budgeting and setting aside money to pay off what you owe. If you have a debt load that is more than you can handle, then it might be a good idea to seek professional debt relief. CreditAssociates has helped thousands of clients become debt-free for a fraction of what they owe. Get a free, no-commitment consultation today to learn more about what debt relief can do for you.

How fast should I pay off my debts?

The speed at which you pay off your debts depends on how much money you make each month, and what budgeting changes can be made to increase this amount so that higher payments can be made. If your debt carries high interest rates, like credit card debt, the longer you take to pay it off the more you could be paying in interest and fees.

Should I overpay on my mortgage?

Overpaying on your mortgage can be a great strategy to help pay off the loan quicker and potentially save you thousands of dollars in interest payments. 

What is the best way to start paying off debt?

The best way to start paying off debt is to create a budget and work the debt payments into the budget. This will allow you to see exactly where your money is going each month, and what budgeting changes need to be made so that a debt repayment plan can be created. If you feel like you have too much debt to be able to pay off, debt relief might be a good option for you. Debt settlement is one form of debt relief that could help you become debt-free through paying a fraction of what you owe.

What are different types of debt?

The two main types of debts are secured and unsecured. Secured debts are backed by some type of assets such as a house or car, whereas unsecured debts are not backed by any asset. The most common form of unsecured debt is credit card debt.

Why do people get into debt?

People go into debt for a number of reasons. Some people spend beyond their means and rack up high credit card bills each month, while others may have lower incomes which results in the inability to save money for emergencies or large purchases.

What should I do if I’m in debt?

If you’re in debt, you could develop a budget based on your income and expenses. After budgeting, you can create a debt repayment plan that will help you pay off debts as quickly as possible. If you owe more than you can reasonably pay off, then CreditAssociates could help you by negotiating with your creditors to reduce what you owe. This is called debt settlement and you can get a free consultation to see if it’s right for you by clicking here or calling 1-800-983-6693.