Budgeting is an essential financial skill that can help you achieve your long-term financial goals. Whether you want to save for a new car, pay off debt, or simply live within your means, creating a budget is a crucial first step. There are many options available for creating a budget, from planning month-by-month to shaping your budget around one central financial goal. It is up to you to determine which option fits your financial needs, but for this time and space, we will explore how to create a weekly budget.
Why Should I Create a Weekly Budget?
Creating a weekly budget can be extremely useful for a lot of people, no matter their financial circumstances or goals. Here are a few of the benefits of creating a budget on a week-by-week basis:
- Improved Control of Spending – By creating a budget on a weekly basis, you have more control over how much money you need to allocate for expenses like groceries, transportation, entertainment, etc. This can help you avoid overspending and stay within your budget.
- Better Tracking of Expenses – Weekly budgeting lets you review your expenses more closely and more frequently, which can help you quickly identify areas of overspending
- Increased Flexibility – Flexibility is one of the biggest benefits of a weekly budget. If you overspend in one area of your budget, you can adjust your budget for the following week to make up for it. This can help you stay on track with your financial goals and avoid making drastic changes to your budget at the end of the month.
- Improved Savings – Everyone loves to save more money, and a weekly budget can help you do just that! By keeping an eye on your expenses on a weekly basis, you can easily see areas where you can cut back your budget and redirect those funds towards your savings.
How to Create a Weekly Budget: 9 Simple Steps
1. Pick a place to plan and track your budget
Whether it’s in a spreadsheet, notebook, ledger, or budgeting app of your choice, writing down your budget in one memorable place can help you better plan and track your spending week by week.
2. Write down how much you get in your paycheck
Next, write down the net amount you receive in your paycheck (make sure it’s the amount you receive after taxes!). If you have multiple jobs or sources of income, include those paycheck amounts, as well.
3. Specify how often you get paid
Note how often you get paid, whether it’s on a monthly, bi-monthly, bi-weekly, or weekly basis. Make sure to account for how often you get paid for your additional sources of income, as well.
4. Determine your average weekly income
To pinpoint your average weekly income, take your net income and multiply it by the factor that aligns with your pay frequency:
- Weekly – 1.00
- Bi-Weekly – .50
- Twice a month – .4603
- Monthly – .2307
- Yearly – .0192
The final amount is your average weekly income!
5. Identify your mandatory expenses
After determining your average weekly income, you will need to know how much money you need to cover your mandatory expenses. Mandatory expenses are payments you make for essential items, such as housing, insurance, groceries, and transportation. Some of these mandatory expenses come at regular intervals, such as loan payments, rent, HOA payments, etc. If you need help identifying your mandatory expenses, pull up your bank and credit card statements and take a look at your payment history.
After identifying your mandatory expenses, multiply each expense by the multiplication factor indicated above. For example, if you pay $1000 a month for rent, you would multiply that by .2307 to determine how much you pay for the subscription every week.
6. Identify the amount of money that is safe to spend and save
Once you have calculated your mandatory expenses, subtract that number from your weekly income. The amount of money remaining is the amount of money you can spend on discretionary expenses or allocate to your savings goals (see steps 7 and 8 for more information).
7. Take into account your financial goals
If you have specific financial goals you want to reach, make sure you account for them in your weekly budget and allocate money from step 6 to each goal. Financial goals may include paying off debt, saving for a trip, or planning for retirement.
8. Set a budget for your lifestyle and discretionary expenses
Now that you have your mandatory expenses and your savings out of the way, it’s time to have some fun! You can allocate the remainder of your money each week to general lifestyle expenses, but it’s important to maintain a budget for these as well and not get carried away by spending outside your means. These discretionary expenses can include going to the movies, date nights, concert tickets, or clothing. It’s important to set an amount of money you are willing to spend on discretionary expenses every week and fit those expenses within your weekly budget.
9. Create and adjust your budget
Once you have completed steps 1-8, take a look at your weekly spending and adjust each budget category accordingly if necessary. Once each category fits within your weekly net income, your weekly budget is set!
How to Maintain Your Budget
Creating your weekly budget is a feat in itself, so maintaining that budget can feel a little overwhelming. Do not worry—with practice, regular check-ins, and proper budget maintenance, your weekly budget process will run smoothly and become second-nature for you. Here are a few tips for maintaining your weekly budget:
- Discipline – Keeping a weekly budget requires consistent effort and self-control, as it’s easy to overspend, neglect savings goals, or make impulsive purchases that can derail your budget. By maintaining discipline, you can stick to your budget, avoid overspending, and establish good financial habits over time.
- Review your progress – Reviewing your progress allows you to track your spending and evaluate whether you are on track to meet your financial goals. By regularly reviewing your progress, you can identify areas where you may be overspending or where you could make adjustments to your budget to better align with your goals. Plus, you can celebrate your successes and meet your financial goals!
- Cut costs that hinder your goals – When you have a limited amount of money to work with, it’s important to make sure that your spending aligns with your goals. Cutting costs that prevent you from reaching your goals helps you prioritize your spending, allocate your resources towards things that matter most to you, and stay focused on creating reliable financial habits.
If you’re looking for additional financial assistance or additional help with how to create a weekly budget, Bank of Bozeman can help. Our team of experts can provide personalized advice and support to help you manage your finances and make informed decisions about your money. From savings accounts to applying for a mortgage, we are here to help you reach your financial goals. Contact Bank of Bozeman today to learn more about our banking services.