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Building Blocks of Budgeting

AFTER-TAX INCOME: Identify all sources of income, including your salary, bonuses, and any other money coming in. Overspending may occur if you use gross income instead of after-tax income. This could create the illusion that you have more money available than you do.

SET REALISTIC GOALS: Define your short-term and long-term goals. Having a clear objective will give your budget a purpose and direction, whether it’s paying down debt or saving for retirement. Being realistic will help ensure you stick with your plan.

EXPENSES: Track your expenses. Understanding where your money is going can help determine where you are spending most of your money and where it might be easier to cut back and save. Categorize your expenses into fixed and variable expenses. Fixed expenses are costs that are the same on a routine basis like mortgage, rent, and car payments. Variable expenses are costs that change over time like groceries, entertainment, and gas.

CHOOSE A PLAN: There are several budgeting methods out there to choose from. Each method suits different individuals. The best one for you should be in line with your needs and financial objectives. Make sure your budget is realistic and adaptable to unexpected changes.

Review and Adjust: Periodically review your budget and adjust to accommodate changes in income, expenses, or priorities. Adjusting your budget allows you to allocate your income to meet your evolving financial situation and goals.

Budget Types


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50% goes towards NEEDS
Rent/mortgage, car payments, utilities, food, insurance and health care.


30% goes towards WANTS
Vacations, dining out, entertainment, and non-essential items.


20% goes towards DEBT AND SAVINGS
Paying down credit card debt, building an emergency fund and making contributions to an investment account.


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rather than saving from money that is left over.


Contribute to your retirement
savings plan.


Set up automatic transfers.


Budget remaining income.


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to a specific purpose.


Income minus expenses should equal zero.


Remaining money can be allocated to debt repayment or additional savings.

Budgeting is an ongoing process that requires regular attention and adjustments. It’s a skill that improves with practice but can feel overwhelming and complicated. It doesn’t have to be. We at Fragasso Financial Advisors are here to assist you on your path to a successful financial future. If you need help preparing a plan for your financial goals, please reach out to your financial advisor, and they will help you create a plan that best fits your financial situation.