How to Build a Better Budget

How can you keep tabs on your spending and maintain an accurate view of where you stand with your personal finances?

Tally Your Expenses

As a first step, add up everything you spend in a month. Use your own ledger or Wells Fargo’s Budget Watch. These tools pull data directly from your bank, credit card and brokerage accounts. This sorts your spending into categories, creating a picture of where your money is going. Divide your monthly spending into two categories: necessities, such as rent and groceries and discretionary costs, such as entertainment and shopping.

Next, total up your monthly income. Then subtract your monthly expenses from this figure. If you’ve got money left over, pat yourself on the back. If you’re in the red, proceed directly to the next step.

Adjust Your Spending

Categorizing your monthly expenses may lead you to rethink your spending habits. You may find that frequent restaurant dinners are siphoning off hundreds of dollars from your budget.

Review interest rates on your credit cards and, if possible, transfer balances to lower-rate accounts. Likewise, refinancing your mortgage to take advantage of low interest rates may save you hundreds of dollars a month.

Save for Emergencies

An unexpected medical bill or house repair can quickly throw a wrench into a budgeting plan.  Prepare  for these unforeseen setbacks by building an emergency fund large enough to cover living expenses for three to six months. Review your budget to see how much you can comfortably allot to an emergency fund each month.

Set Up Automatic Transfers to Your Savings Account

Once you have a savings target, set up automatic transfers from your paycheck to your savings account — and make sure you don’t dip into those funds.

The work you do now to build a sustainable budget will likely pay dividends. You’ll manage your day-to-day finances better and free up financial resources to pursue long-term goals such as retiring comfortably or helping fund a child’s education.

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This article was written by Wells Fargo Advisors and provided courtesy of

Christina A. Karas Vice President-Investment Officer in Boca Raton

at 561-394-7561

Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.