If you are an educator, you know how important budgeting is. Whether you take a summer job to have a year-round income or rely on your school year to pay for bills, budgeting your money properly may help you to stay on track with your financial goals. If you are ready to get your budget whipped into shape, below are a few simple tips to help you get started.
Set Financial Goals
While paying the bills each month is a top priority, it is also important to identify the other financial goals that you may want to work toward with your savings. Once you have determined your goals, make a list of steps for each that may assist you with those goals. Do you need to improve your credit score? Will a down payment be required to buy a home?
List All of Your Income
When creating your budget, the first place to start is with your income. List your consistent income, and then divide it by 12 months to give you your average monthly income.1 Next, calculate any varying income from side gigs. Take the amount you had for the lowest three-month period and divide it by three. Add this figure to your monthly income. This gives you your monthly income estimate, as a figure on the lower side, which may provide you with a bit of extra cushion for rougher months or emergencies.
Determine Your Monthly Expenses
List all your fixed monthly expenses, including the minimum monthly payments on your credit cards and a portion for food, clothing, medical expenses, prescription copays, and miscellaneous expenses. Total these costs to determine your minimum monthly expenses.1
Calculate Your Total Debt
Look at your total debt from loans and credit cards. Total all the amounts and write the figure down. This is the amount you may begin to tackle once you have paid your expenses.
Tabulate the Information
Now is the time to calculate your budget and see what you may have leftover to go toward your financial goals and tackle your debt. If you subtract your expenses from your income and the balance is negative, you may need to find a way to increase income or eliminate some of your expenses.
If you end up with a positive amount, you may want to determine a portion that may go towards saving for your future goals and a portion that may be allotted to pay down debt.
Budgeting is critical for teachers who may have multiple sources of income or only receive regular pay through a portion of the year. A budget is useful to stay on track and make sure that teachers cover all their expenses while working on debt reduction and other goals.2
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
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