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Our Budgeting Tips and Tricks guide provides everything you need to build your ideal budget and start saving for what matters.




One of the first things an entrepreneur does when launching a new venture is craft a detailed budget. This financial guide articulates anticipated expenses, revenue, and sound budgeting strategies to achieve goals.

It seems counterintuitive that couples and singles don’t always treat their personal finances like a small business. After all, households mirror mom-and-pop operations in terms of monthly utilities, rent or mortgage payments, and other expenses. Owners and operators are also tasked with checking incoming revenue against outgoing expenses to ensure the venture stays afloat. The same holds true of working community members, who need to take home more than they spend each month.

Ironically, too many people do not adhere to sound budgeting principles and many suffer the consequences of excess spending. By practicing simple budgeting tips, you can make informed decisions about spending and learn how to save money for quality-of-life enhancements and retirement.


Budgeting Basics

If budgeting is a new practice for you, it’s essential to understand the basic elements and reasons why it can help you improve your quality of life. In our culture, money is a necessary tool we use to purchase food, clothing, shelter, and transportation, and to advance our educational and retirement goals. Having a surplus allows us to invest in leisure items, such as a vacation, boats, luxury vehicles, and other niceties.

This type of financial plan simply adds up your average monthly income and compares it to total expenses. It also involves creating spending categories that help you see where your hard-earned salary is going. With that basic information in hand, you can make strategic decisions about when to spend and how to save money. Despite the advantages of sound money management, not everyone truly understands why they need a budget.

Why You Need a Budget

The reasons why you need a budget can be viewed through two lenses. The first includes potential dire consequences of spending money willy-nilly and the second looks at the benefits of smart budgeting. In terms of consequences, people who do not follow basic financial planning typically get caught off guard when unexpected expenses need to be paid or they suffer an income setback. The result is often falling behind on monthly bills, having swollen credit card balances, and slipping deeper into debt.

There are wide-reaching reasons why failing to observe frugal spending habits negatively impact your lifestyle. On the other hand, these are positive reasons you need a budget.

  • Life’s Little Extras: Budgeting allows you to establish an account to use for modestly expensive leisure items. Short-term savings can be used for things like an outdoor gas grill, a new gaming system, a designer dress, fashion wear, or a weekend at the spa for some overdue pampering. An organized budgeting plan can help you save up for pleasurable purchases.
  • Special Events: There are milestones in every family that require a small to mid-sized investment. Among the most memorable are weddings, retirement parties, and graduations. These rites of passage bring family and friends together around food, beverages, and entertainment. Long-term budgeting strategies account for the financial resources needed for these and other events.
  • Reduces Anxiety: Because well-thought-out budgeting opens the door to a variety of savings opportunities, community members can establish accounts for likely expenses. For example, automobiles will break down at some point and the cost of parts and labor has risen significantly in recent years. Too many people pay car repair bills with credit cards, adding interest to these and similar expenses. Having the cash on hand to swipe a debit card or write a check saves money. Knowing you have the money tucked away reduces anxiety. 

These are some of the positive benefits of following a monthly budget. We’ll discuss the reasons you need a budget to accomplish larger life goals later.

For a more in-depth look at reasons why you may need a budget, review our “7 Signs You Need a Budget” blog

How to Build a Basic Budget

One of the popular budgeting strategies is known as the 50/30/20 rule. This approach to navigating income and expenses is relatively straightforward. It has been widely adopted by people building their first basic budget because it simplifies expenses by placing them into the following three categories: necessities, wants, and savings.


Budget 50 Percent of Your Income for Necessities

Necessities are all the bills you must pay to fulfill and maintain basic needs. These typically include groceries, clothing, rent or a mortgage payment, transportation, health insurance, utilities, and at least minimum monthly debt installments. Keep in mind you don’t actually “need” cable television, Uber eats, or dining out in fancy restaurants. Those and others fit into the next category.


Budget 30 Percent of Your Income for Wants

Needs are the things you absolutely cannot live without. Wants, on the other hand, are expenses that enhance your lifestyle. Budgeting doesn’t mean you have to become a minimalist; leisure expenses are important. This budgeting system allots 30 percent of your overall income for things like a Starbucks latte, smartphone plan, Netflix, weekend excursions, gym memberships, and travel expenses.

Budget 20 Percent of Your Income for Savings

It’s no secret that Americans struggle to set aside money. The Bureau of Economic Analysis indicates the average personal savings rate was a stunningly low 3.4 percent heading into 2023. Adopting this basic financial framework helps cure this condition by assigning 20 percent of your income to be deposited into one or more savings accounts.

These could involve a 401(k) for retirement, a savings account to fund an annual family vacation, a rainy-day fund, or money for big-ticket items. One of the ways community members stick to placing 20 percent in savings each month is by leveraging direct deposit options. It’s a lot easier to save money when you remove the temptation to spend it.

Although the 50/30/20 rule remains a popular option for many, it may not be right for you. The cost of living in your area may call for more than 50 percent to be applied to necessities. Reducing credit card balances may also require you to tweak the percentages. If the numbers don’t work seamlessly with your current financial situation, don’t hesitate to adjust them or select another budgeting approach that makes sense for your circumstances and spending habits.  


How to Determine Your Income vs Expenses


Gaining a clear picture of your income and expenses is the first step to building a budget. In terms of determining your income, the only revenue that matters is your take-home pay. Gross wages are not necessarily important, as long as you structure tax deductions so you don’t owe the IRS money come April.

Gather all the statements that reflect weekly, monthly, and fluctuating income sources. Add up these figures to determine your overall annual net income. Then, divide that figure by 12 and you’ll have the average monthly income amount to use in your budget.

Determining monthly expenses tends to be slightly more complicated. After gathering all of the documents that identify outgoing money, it may prove helpful to assign the expenses to the following categories.

  • Fixed Expenses: These are your regular monthly bills that generally do not change. Expenses such as utilities, rent, car payments, health insurance, and internet services, among others, are considered fixed expenses.
  • Variable Expenses: These are usually discretionary expenses, such as travel, dining out, entertainment, and other leisure buys. This class also includes credit card payments. As they relate to the 50/30/20 rule, credit cards fall into the 30 percentiles because variable expenses are not usually necessities.

After arriving at a monthly average for income and expenses, subtract the former from the latter. If your income is higher than your average monthly expenses, you may be in a position to pay down debt or grow your savings. If your expenses exceed your average monthly income, use your budget as a guide to making spending cuts. Creating a positive cash flow and reducing credit usage also helps raise your FICO score.

While creating your budget, be sure to review our “5 Expenses That are Throwing Your Budget Off” blog. 


Why Your Credit Score Matters

Your credit score is calculated by the three major reporting bureaus — Experian, Equifax, and TransUnion — based on impartial financial metrics. These include repayment history, credit usage, debt, as well as length and types of accounts. Based on these factors, the credit bureaus assign consumers a three-digit FICO score between 300 and 850, which indicates your creditworthiness. The following ranges are generally how lenders view FICO scores.

  • Excellent: 800–850
  • Very Good: 740–799
  • Good: 670–739
  • Fair: 580–669
  • Poor: 300–579

The primary reason your credit score is important is that lenders will strongly consider it when approving loans, credit cards, and other borrowing opportunities. Higher scores typically result in borrowers receiving lower interest rates and a wider range of lending options. Lower scores usually limit your options and result in higher rates. If you are structuring a budget to reduce debt, save money, and improve your credit score, it may be worthwhile to conduct a review.


Credit Score Review

Consumers have a right to receive a free copy of their credit report from Experian, Equifax, and TransUnion once per year. Copies can be requested online or by writing the bureaus. By getting a copy of your credit history, you’ll be able to identify any errors that are lowering your score and request a correction. The detailed reports also provide insights regarding blemishes that are relatively easy to fix. It’s not unusual for consumers to improve their FICO score within 30 days. The reports can also be used to align your budget strategies to improve your score.

Check with your bank or credit union; they typically offer complimentary credit report reviews, offering tips on how you could potentially improve your credit score.

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Budgeting Tips to Save for Every Age


No one is too old or young to start a monthly financial planning regimen based on a fact-based budget. By that same token, people at certain phases of their lives often have different financial goals. For example, young adults who have entered the workforce and are starting families may be focused on purchasing a starter home or paying off an automobile loan. Older adults are more likely to be downsizing and are budgeting their resources for retirement. Those are examples of why it’s essential to employ a flexible strategy and budgeting tips that best serve your goals and interests.

Budgeting Tips for Young Adults

Knowing how to save money may not resonate with a sense of urgency among young adults because there seems to be ample time until retirement. Nothing could be further from the truth. The average life expectancy of Americans hovered just under 80 years old in 2023. It has risen from 68 years old over the last 50 years. If you’re a 20-something now, consider how much you’ll need for a lengthy retirement. By applying the following budgeting tips, young adults can accomplish life goals and be better prepared when their golden years arrive.

  • Start A Retirement Account: Opening a 401(k) in your late teens or early 20s is an opportunity to take full advantage of market growth. Young adults do not necessarily need to make retirement packages a high priority. However, having a small percentage directly deposited is an excellent long-term strategy.

  • Pay Down Unsecured Debt: Credit cards and personal loans generally come with higher interest rates than secured products. One of the best ways to keep more of your salary is to pay off loans quickly and position yourself to eliminate credit card balances each month. This will also help you build a robust FICO score.

  • Establish Emergency Fund: Some financial planning experts believe a rainy day fund should have a high enough balance to cover six months of your expenses. Frugal young adults generally do not have a lot of expenses. This means you can establish an emergency savings account and trickle in a modest percentage of your monthly income. This budgeting tip helps build a fund gradually that reflects your growing expenses.

It’s also essential to parlay your savings with products such as a high-yield money market account. Or if you want to earn 50 times more than the national average checking rate, open a CCCU Apex Checking Account! The sooner you have a down payment for a house, the sooner you’ll stop squandering your salary on rent. The key to financial comfort for young adults usually involves frugal spending and long-term planning.

Before you start making your budgeting plans, be sure to review our “9 Easy Budgeting Tips for Young Adults” blog for more valuable tips. 

How to Budget with Kids

As you go through different phases of life, not only do your financial circumstances change, but your family may also expand to include a partner as well as children. Having a healthy relationship with money and a strong grasp of good budgeting habits that you can share with your kids. 

Children are never too young to learn financial literacy lessons. Teaching them how to budget at an early age often leads to retaining sound practices when they are adults. That’s why it’s important for parents to avoid treating money like a taboo subject and begin an open, family dialogue. By treating money as a tool to make purchases and achieve life goals, youngsters can better understand its crucial purpose. That being said, these are tips on how to budget with kids.

  • Establish Chore-Based Allowance: The correlation between earning money and putting it to work is critical if children are to learn its value. By requiring youngsters to complete chores that earn a specific amount, they are more likely to feel invested in saving and spending their money.

  • Start Saving Early: Using a piggy bank as a way to teach children how to save money remains a tried-and-true method. Consider adding an accounting sheet next to the piggy bank that indicates each deposit and total balance. This mimics the passbook savings accounts parents usually set up for teenagers. It’s also a good way to integrate a child’s spending desires.

    You can also open a CCCU Youth Savings Account and the credit union will deposit just for opening. 

  • Make A Withdrawal: Consider discussing a child’s first, or next, purchase from their piggy bank or savings account. Write down the amount of the purchase and ask if they wish to deplete all of their savings to buy the item or wait. The notion the child will have “no money left” often motivates them to wait until they possess a surplus. This process can be an invaluable lesson in how to budget with kids.

The use of a classic piggy bank, coupled with an open dialogue about money management, helps establish lasting budgeting practices. Parents are also creating an opportunity to discuss more complex budgeting as youths earn money from after-school jobs. These principles are life lessons that ultimately help prepare the next generation for retirement.

While you are teaching your kids smart budgeting habits, be sure to review our blog “How to Budget with a Family and Still Have Fun” so you can show your kids that budgeting is possible while still having fun. 


Budgeting Tips for Retirement Planning

Retirement planning needs differ significantly because they must account for regional cost of living, life expectancy, and at what age someone decides to leave the workforce. The more people invest in retirement products, such as a 401(k), private pensions, and maximum annual salaries toward Social Security benefits, the better their financial comfort will be during their golden years. The U.S. Department of Labor publishes a pamphlet outlining the "Top 10 Ways to Prepare for Retirement". These are some of the retirement planning strategies the federal agency encourages.

  • Know Your Retirement Needs: Experts estimate people over 65 will require 70-90 percent of their previous income to enjoy a similar standard of living.

  • Employer Pension Plans: Ask pertinent questions about your company’s pension plans. Find out when you are fully vested, how it’s being invested, and what happens if you leave the organization before retirement.

  • Hands-Off Retirement Accounts: Withdrawing money from a retirement account early often results in lost interest and penalties. You may also incur unnecessary tax liabilities.

  • Invest in an IRA: Put the maximum, non-taxable allowable amount in an Individual Retirement Account whenever possible. Traditional and Roth IRAs are an easy way to set aside money for retirement. By setting up a direct deposit, you won’t even notice the paycheck deduction.

It’s also a good idea to check on your Social Security benefits. You can set up an account on the Social Security Administration’s portal. There will be detailed information about benefit amounts based on your previous taxable income and the age you plan to retire.

Retirement planning can be overwhelming. Before you dive in, be sure to check out our blog “How a Budget Can Help with Retirement Planning” so you can create a budget that will help you enjoy your retirement. 


Importance of Savings

Consistent budgeting and frugal spending habits help people save money. Your added savings also present investment opportunities to grow your money. Regardless of age or financial goals, there are robust possibilities to work for future endeavors.

Teens vs Young Adults vs Retirement 

Teenagers who learn budgeting skills at an early age may be more inclined to take proactive measures to secure their future. For example, the piggy bank that transitions into a savings account could easily see a percentage invested into an Education Savings Account. This is a tax-advantaged option designed to pay for educational expenses, such as books, tuition, and equipment.

Another option that helps increase savings is to move money from low- to high-yield accounts. Money Markets and Share Certificates are considered safe options that deliver sound returns on investments. There are also ways to invest the money from savvy budgeting into packages before and after retirement. That’s why it may be worthwhile to speak with a retirement planning specialist.

Saving for Future Expenses

Implementing an intelligent budgeting plan doesn’t necessarily mean you have a designated future use for the money. Once a secure emergency fund is in place, the additional revenue could be used to launch a business or surprise your spouse with a second honeymoon. The possibilities are endless, but there are also fundamental investments to consider, such as the following.

Saving for a House

By setting aside a 20 percent down payment on a home, you can avoid paying an unnecessarily high-interest rate and mortgage insurance. Having practiced good budgeting techniques and improved your FICO score along the way, it’s possible to take advantage of a reasonably low-interest home loan product.

Savings for Retirement

Saving for retirement is an absolute must. Social Security benefits are unlikely to maintain your current standard of living. With Americans living longer, maximizing retirement savings through savvy investments could buoy your comfort after 65.


How to Save Money Every Day

Saving money every day begins with creating a monthly budget and making adjustments over time. The 50/30/20 rule is considered a good jumping-off point. But you can also tweak the percentages and personal expenses to funnel more money into savings. Once you get acclimated to this financial management approach, you’ll be saving money every day and not even realize it.

For more useful money-saving tips in your day-to-day activities, read our “How to Save Money by Changing These 8 Habits” blog. 


How CCCU Can Help with Budgeting

At CCCU, we're for people, not for profit. That means our employees are empowered to listen and understand each person's individual situation, uncover their needs, and offer the right products, services, or resources that can help them reach their financial goals. That includes budgeting tools and tips, a range of retirement, college, and financial planning options, as well as primary savings and checking accounts.

Our credit union believes in simplified banking that's accessible for everyone. From low-interest credit cards and mortgage loans to high-yield savings accounts and automatic bill-pay, we have all the tools you need to achieve and maintain good financial health.

CCCU proudly serves people who live, work, worship, own a business, or attend school in Multnomah, Clark, Washington, Hood River, Clackamas, and Yamhill, Columbia, and Skamania counties, and their family members. We have two physical branches in Portland and one branch in Hood River, convenient mobile banking, plus access to 5,600+ CO-OP Shared Branches and over 30,000 surcharge-free CO-OP ATMs nationwide.

Join us today.