Guest Blog by HHUSA Partner: VA Mortgage Center


Build Your Finances Through Budgeting



Creating a budget is a necessity that can save you time and grief in the long run. Starting a budget generally requires three steps: identifying how you spend money, setting goals that will follow your long term financial objectives, and tracking your spending to make sure more money is coming in then going out.



Identifying Your Spending Habits



Identifying your spending habits can be a rude awakening for some. Follow your expenses for two to three months and keep a record of where your money is going, who it is going to, and how much. This can be done with something as simple as notebook paper, or to save yourself time, you can download budgeting templates from Microsoft or use a free service like


When tracking your expenses, be able to distinguish between mandatory and discretionary costs. Mandatory costs are expenses that you are required to pay each month, for instance, your mortgage, vehicle payment, taxes, and groceries are all mandatory costs. Discretionary costs are expenses you have control over and do not necessarily need, which can include entertainment, gym memberships, and hobbies.



Setting Goals



Setting goals could be the most important part of establishing your budget. When setting goals it is best to follow the SMART system of making sure your goals are Specific, Measurable, Attainable, Realistic, and Timely. Nothing is more demoralizing than setting a goal that can never be reached. A good starter goal for every budget is to pay yourself first, for some that could mean 10% of your paycheck every pay period.



Tracking Your Spending



Before you track your spending, calculate your monthly income by either dividing your salary by twelve or taking a three-month average for commission and hourly workers. Know how much money is coming in as well as how much is going out. If your expenses outweigh your income, then start cutting away at your discretionary income as much as possible until you can achieve a balance where you are not spending more than 90% of your income.



Build an Emergency Fund



So, what do you do with the extra income you saved by budgeting? Build an emergency fund! The hardest part of a household budget is accounting for emergencies and unexpected financial hardships. The easiest way to stay clear of problems that arise from an immediate loss of income or an increase in expenses is to have an emergency fund.



Emergency funds are best put in interest bearing checking, savings, or money market account, these accounts are all easily accessible, which allows for quick removal if the unexpected happens.



There is no right number to save here, since every family is different. Having a $10,000 emergency fund may be ideal, but let’s be realistic. Try to save enough to pay basic expenses for 2-4 months, whether it is $500 or $5,000 make sure you can cover yourself and keep your credit intact.



If you do not have the addition income to set up an emergency fund, try taking your tax refund and putting it away. Remember, the most important part of saving for an emergency fund is to not touch the account unless there is an actual emergency.



Being financially sound takes time and effort. Budgeting for life and life’s emergencies will help keep your finances stable in the worst of times.



Matt Polsky is the Senior Content and Reputation manager for VA Mortgage Center, managing VA Mortgage Center reviews and complaints, while providing insights learned from the nation’s leading provider of VA home loans.