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Budget Better for What You Need

When it comes to budgeting, a bit of patience, some self-discipline and careful planning goes a long way. The better you budget, the more secure you'll feel. Remember, a budget is not just a tool to help you live within your income. It is also a way to help you get what you want out of life.

Setting Up Your Budget

You can create a budget in four easy steps.

  1. Identify how much money comes in each month. Smart Tip: If you're Active Duty, don't include military housing or food allowances in the income portion of your budget since they can disappear if you're deployed.
  2. Write down the amount that goes out each month.
  3. Divide your expenses into two categories: fixed and variable. Fixed expenses include payments that don't vary from month to month, like rent, car payments, and internet bills. Variable expenses include expenses that change from month to month, like groceries, dining out, and clothing purposes.
  4. Total the income and the expenses columns and make a plan for how you'll spend money this month. Smart Tip: To help simplify the process, consider using a basic computer program like Excel or using a specialized program like Quicken.

Sticking To Your Budget

Now that you've set up a budget, it's time to put it to use. During the first few months, continue to track expenses and compare them to your spending plan.

Remember, this is your plan, so spend a few minutes thinking about what you want. The following questions may help you hone your budget into a spending plan that complements your goals:

  • Does the budget match your financial reality, or does it need to be tweaked?
  • Are you staying on track with your spending plan? If not, what needs to be changed? If so, what was easy?
  • Are there areas of spending that can be trimmed?
  • How can you make the budget work for you?
  • What are your short-term financial goals? What are your long-term financial goals?
  • Is the budget set up to help you reach them?

To answer some of these questions, start by making a list of your short-term and long-term goals. Short-term goals will be goals you want to reach within a year or less; it might include minor home renovations, a piece of furniture or purchasing a home theater. Longer-term goals might take several years—perhaps a new car, a vacation, or a down payment on a house.

Differentiating between real needs and wants helps tremendously. Needs are the things you need to survive like food, shelter, and clothing. Wants are things you can live without, such as a new TV, DVD player, or fashion accessories. People get into financial trouble when they begin spending too much on unnecessary things. Limit your spending to the things you really need and can realistically afford.

Develop a list of priorities based on how important they are to you and how soon you'll be able to afford them. Keep a record of what you're spending. Separate the fixed expenses (like housing, taxes, loans and insurance) from the variable expenses (like food, clothing and entertainment).

Updating Your Budget

A budget that works today won't necessarily work in five years. The following life changes often mean it's time to rework your budget, so don't hesitate to modify it as needed:

  • Getting a new job, promotion, or raise
  • Changing your marital status
  • Having a baby
  • Making (or planning to make) a large purchase, such as a new car or house
  • Moving to a more (or less) expensive location

Helpful Resources

At Navy Federal, we're committed to providing you with solid information so you can make wise financial decisions. 

Get more expert advice by looking through our tips and tools below and taking advantage of Navy Federal's free confidential personal financial counseling.


This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.