The Basics Of A Good Budget

Its early 2018 with an abundance of New Year’s resolutions. One of them may be to set up a budget to fund a vacation away from the cold weather, buy a new car, pay down your credit cards or buy a home. Or, maybe to save money for the future.

When people think budgets its analogous to diets. You plan to do something, you follow through, and somewhere along the way the breakdown happens. A splurge today, another tomorrow, before you know it you’ve given up altogether.

A budget is a roadmap you prepare for yourself to guide you in achieving particular goals. According to, a budget is defined as “an estimate, often itemized, of expected income and expense for a given period in the future.” In other words, it is how much money you make each month and how much you spend each month.  They can be created weekly, monthly, or even yearly. 
Unfortunately, there is a lot of stigma surrounding budgets with some people believing that budgeting will deprive them of impulse purchases or the ability to go on a trip.  Not really.  Those are reasons for having a budget – to enable us to purchase what we want or take a trip, as long as it is reasonable.  The key to a good budget is discipline. The most important part of a budget allows you to spend without causing detrimental harm to our financial picture.

A budget is a comparative of which bills should be paid with each paycheck, and to save for a big purchase or trip that is being planned for the future.  Without having a budget, it is almost impossible to keep track of everything and to know where your money ends up each month.  One thing to remember about a budget, it doesn’t have to be perfect or precise. Unexpected circumstances may and do arise which could cause the budget to change.

To get started list all of your income for the month in one column and your bills by due date in another.  Your expenses include rent or mortgage payment, groceries, utilities, insurance (auto, home and life), cable and internet, gas for your vehicle and more. Expenses can also include costs that aren’t necessarily paid each month, such as tuition payments, charitable giving, etc.  This will give you a solid basis to start your monthly budget. 

The budget below is a very simple example of a monthly budget that was compiled using general numbers based on a bi-weekly pay cycle. Depending on the goals of each individual, a budget will vary from person to person.  With a budget, you will be able to track your spending, pay bills on time, and be more aware of your finances each month to help you meet your short and long term goals.
Merchants Bank Online Banking can help you stay on track with your budget. You can schedule your monthly (recurring) bill payments so you never miss a due date. And, by making your deposits with ACH direct deposit or mobile deposit, you save time by not having to make a trip to the bank.
Talk to us if you need assistance or would like to learn more about our services.

Click here for a sample of a budget layout.