How to Create a Budget for 2024 in 5 Steps

When living on retirement funds, disability income, or other fixed wages, you want to ensure you get the most value for your income. Rising expenses can make it frustrating to figure out how to handle expenses when you have limited funds. Creating a budget can help alleviate that frustration and make living on a fixed income possible. If you’re unsure where to start, consider these five financial tips from Acumen Fiscal Agent.

1. Make a List of All Income Sources

The first step is to list all of your income. If you receive wages from multiple sources, such as a pension fund, social security benefits, or part-time job, be sure to include those. Next to each income source, list the amount and frequency with which you receive your funds and total all income and wages. This information is very helpful to know when creating a manageable budget. 

2. Make a Note of All Expenses

Once you’ve listed all income sources, the next step is to write down your expenses. This should include large expenses, like mortgage or rent payments, vehicle loans, and insurance, to smaller costs, such as daily coffee runs or weekly take-out. Any expenses you pay annually, quarterly, or bi-monthly should be included, too. As with your income sources, add up all of your expenses to discover the monthly total.

3. Categorize Your Expenses

Next, sort your expenses into different categories: food, utilities, housing, etc. Expenses like groceries, eating out, and coffee runs would fall under the food category, and water, heat, and electricity would be included in the utilities category. Placing your expenses into categories helps you see where you spend your money and which categories take up most of your budget.

4. Create Your Budget

The last step is to discover if your income covers your expenses or if changes need to be made. If all your income is accounted for and all your expenses are covered each month, then you have completed a zero budget — when you subtract the total monthly expenses from the total monthly income and get zero. Adjustments must be made if your expenses are greater or less than your income. 

5. Make Adjustments

If there are not enough incoming funds to pay for your cost of living expenses, you may need to reduce the amount you spend each month. This is why categorizing your expenses is valuable. A helpful rule of thumb is to ensure that essential costs are covered first. This includes housing, vehicles, groceries, and clothing. You may be able to reduce these, but they are necessary to work and live. Consider adjusting non-essentials, like entertainment or eating out, first. If your income exceeds your allotted expenses, you can choose where you want the accounted funds to go. A few options are depositing them into a savings account, using them to pay extra on debt, or boosting an expense category that may be increasing this year.

Helping You Prepare for the New Year

Acumen Fiscal Agent assists individuals in self-directing their services. Our systems allow the employer to easily monitor expenditures of funds in real-time so they can stay within their budget for the new year. If you need innovative and responsible fiscal intermediary services, contact us at (877) 211-3738. 

Source: Shuman, Taylor. "8 Helpful Tips to Building a Budget on a Fixed Income." Web article. SeniorLiving.org. Centerfield Media Company, 15 Nov. 2023. Web. 31 Dec. 2023.