Financial Calculators

Helpful articles and information

At the start of every year, many people make a resolution to be smarter with their money. At Solarity Credit Union, we’re here to help our members make better financial decisions at any time of the year. So, if you want to start off the new year right by creating a personal budget, read on for our expert advice.

Start with your monthly net income

Your income is the foundation on which your personal budget will be built. But many make the mistake of drafting a budget from their total salary, not their net income. Net income is the total you receive once taxes and retirement have been subtracted. If you don’t consider these things, you could be at risk of overspending.

If you have one salaried income, figuring out your net income is pretty simple. But if your income is more irregular, you’ll have to make an estimate. If you’re self-employed and/or a contractor, keep track of your income from month to month. If you have a second job or any side hustles, factor those in as well.  Work from an average of the past six months.

Estimate your monthly expenses

After figuring out your net income, estimate and calculate how much you expect to spend. This is where you consider necessary expenses. Start with fixed expenses like utility bills, car payments and rent or mortgage payments. These are all charges that will likely stay the same from month to month.

Then factor in the necessary expenses that are more variable. This includes groceries, gas and other transportation needs. While these expenses are not fixed, you can look at past months via bank statements to estimate and get a general sense of what you will spend. It’s always best to overestimate.

Track your spending

When you calculate estimates, mark them down. And going forward, you can jot down your daily, weekly and monthly expenses right after you pay them. Just the act of recording your spending can help you stick to a budget and can show you some of the unnecessary purchases you’re making.

Creating a visual guide for your 2025 personal budget can be a great way to stay on track. You can create a spreadsheet via Microsoft Excel or Google Sheets. There are also budget spreadsheet templates you could likely find and download for free online. If you’d like a hand, there are a number of apps for tracking expenses as well.

Set personal budget goals

Setting responsible spending goals is a big part of creating a personal budget in the first place. But you will also want to consider more specific goals. Of course, keep in mind that the goals you set should be realistic.

When you’re in the personal budget creation stage, write a list of financial goals you hope this budget helps you achieve. Break these down into short- and long-term goals. Typically, short-term means anywhere from a few months to a few years down the line. Long-term typically applies to larger goals further into the future.

Examples of short-term goals include saving for a vacation, paying off your debts and saving up for big purchases like a home or a car. Common long-term goals include saving up for retirement or for your children’s education costs.

Naturally, your goals can change throughout 2025. If you achieve goals throughout the year or think of new ones, edit your list accordingly.

Consider the 50/30/20 rule

The 50/30/20 rule is a standard of personal budget plans. It’s a guide some people use to divide their net income. The basic breakdown is as follows:

• The 50 means that 50% of your income goes toward necessary expenses. That includes fixed expenses like rent/mortgage, car payments and utility bills. It also includes variable necessities like groceries and gas.

• The 30% covers expenses that aren’t exactly necessities. This includes entertainment, subscriptions, shopping, restaurant and/or takeout bills, vacations and so forth.

• Finally, the 50/30/20 rule includes setting aside 20% of your income for saving or paying off your debt. This includes paying off credit cards as well as saving for future expenses like education and retirement. Also, it’s smart to keep some funds to be used in case of any emergencies.

Look for areas where you can adjust your spending

When you plan and create a personal budget, it lays out your income, average spending and financial goals right in front of you. Once you glance at your budget spreadsheet, you will start to see areas where you can and should make some changes. For instance, if you spend quite a bit on take-out or fancy coffee drinks, you can aim to cook more and make coffee at home.

In this day and age, it’s common for people to overspend on various streaming services. If you find yourself subscribing to services you don’t even use, consider canceling or pausing your accounts. Or, if you solely watch streaming these days, cut out cable.

Keep track of and regularly look over your personal budget throughout 2025

Creating a personal budget is a great first step toward financial security. However, if you don’t regularly review your spending, it’ll be easy to fall back into bad habits. Listing your goals can also help you to focus on saving for what’s important. This reminds you not to spend so much on frivolous things.

Naturally, a number of things could change throughout 2025. Your income could change if you get a new job or a raise in your current position. Your expenses could change for reasons you couldn’t have predicted at the start of the year. Or you could reach some short-term goals and start to create new ones.

Your personal budget isn’t set in stone. And you don’t have to scrap it entirely to accommodate these changes. Just follow the steps laid out above and adjust as necessary. This is another reason why using a budget spreadsheet is so beneficial.

A personal budget is a big way of making 2025 your most financially successful year yet. But it’s not the only way. Here at Solarity Credit Union, we also provide members with plenty of tips and resources to spend smarter and save more effectively, including a free financial review. Not a member with us yet? Don’t hesitate to join Solarity. Apply online today.