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How to Start a Budget and Save for Your Goals

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Establishing realistic spending and saving habits is challenging for everyone. Whether it is for personal or business savings, budget planning has the same basic goals and processes that, once applied, can make achieving your financial goals easier than you think.

Why is it important to budget?

Setting up a budget and following it creates healthier spending habits by reducing stress and motivating you towards attainable short-term and long-term goals. Recent research conducted by The American Institute of Stress shows that the second most common factor of stress in Americans is money.

A budget is simply a roadmap for where your money will go. You develop that map, but there will likely be unexpected detours to maneuver before reaching your final destinations.

Assigning your money a job to follow on the budget map helps you plan for both the expected and unexpected, preventing emotional spending that can derail your financial focus.

Why do you want a budget?

Creating a budget is a way to achieve short and long-term goals. There are many reasons for planning a budget, to include (but not limited to):

  • Saving for retirement
  • Building an emergency fund
  • Buying a house
  • Purchasing a new vehicle
  • Paying of debt
  • Saving for college
  • Saving for vacation
  • Purchasing equipment for a business
  • Expansion of a current business
  • Saving for personal or business taxes

Short-term goals should take no longer than a year to achieve, while long-term goals (such as retirement, college tuition, business expansion) may take years to reach.

Your goals should be specific and include reasons why you want to save. It could be to get out of a paycheck-to-paycheck cycle, to get out of debt faster, or to save money just for emergencies. Whatever the reason, list them all so you can place them on your roadmap budget, assigning either short-term or long-term timelines to them. This will clarify why you are saving and provide the motivation you need to take the next step; start your budget.

How do you start a budget?

Step One: Start with Income

First calculate income from all sources. This can include:

  • Wage income (net income after taxes, benefits, etc.)
  • Money from side gigs, freelance work, hobbies, etc.
  • Alimony and/or child support
  • Business income
  • Income from investments

If you have extra income from inconsistent sources (i.e. side gigs, freelance work, hobbies, etc.) or if you have a business that may be affected by seasonal sales, be sure to review your income at an annual level for these income sources. Consult your account or bookkeeper to validate you have accounted for all sources of income.

Step Two: Calculate Expenses

Be honest and detailed when determining your expenses. Consider daily, weekly, monthly and annual expenses. Review your bills and statements, and consult with your accountant to verify you have accounted for all expenses, including fixed and variable expenses.


  • Rent or mortgage
  • Utilities and insurance
  • Loan payments (student, auto, business loan, etc.)
  • Minimum credit card payments
  • Payroll and taxes
  • Current allocations to savings, investment, or additional credit payments



  • Gas
  • Groceries
  • Personal grooming products/services
  • Entertainment and dining out
  • Vacations
  • Household items
  • Office supplies
  • Commissions paid to employees
  • Business travel
  • Emergency funds and unmanned expenses.

You will have more control over variable expenses, and spending habits are easier to change  with these items. It is also extremely important to plan for the unexpected, whether that is your car breaking down or unexpected changes in customer buying habits. For business owners, check out our article on the importance of an emergency fund for more insights.

Step Three: Determine Savings Goals

Next, determine how much you want to save, invest, or use to pay down existing debt (long-term and short-term debt.) Aim to target any credit card balances first, as these typically carry a higher interest rate than other forms of debt.

Consider what you are saving for, such as vacation, buying big-ticket items (such as a car), sending a child to college, or retiring by a specific age at a certain level of comfort. There are many factors to consider when determining savings and investing goals, so if you can consult with a trusted financial advisor, it is well worth the time and cost to do so. You want to ensure you have factored in the value of your money saved by the time you need to use it.

Step Four: Put Savings Habits Into Action

Now that you have a clear goal in mind, it’s time to put your plan into action. Be strategic by using automated savings and debit payment options that will ensure you have money going to where you plan it to go, so you can set it and forget it.

Review where you can minimize or eliminate expenses. This can be dining out fewer times a month, opting for less expensive cable/internet options, or changing your brand buying habits at the grocery store. All spending adjustments, no matter how small, can add up quickly.

For business owners, monitor and review employee credit cards and reimbursement reports. Update spending and travel policies to align with your budget plans, and educate employees on appropriate business spending. Provide incentives (when possible) for employees to contribute to reducing company costs by offering either monetary rewards (bonuses, paid time off, etc.) or be rewarding the team with a party or team building activity.

Step Five: Hold Yourself Accountable

Keep yourself focused and accountable by monitoring your saving progress. Review statements and discuss your spending habits with anyone (family, partners, employees) that are a part of the spending activity.

Adjust your budget, including placing any extra money in the appropriate savings or investment channel. Your goals are not set in stone, they are a map to better plan how your money works for you. Sometimes you will need to update that map or add extra paths along the way to be more efficient with your earning and spending habits.

Make an appointment with one of our experienced bankers today to evaluate how your banking finances can work better for you.