By Aaron Allen, The Seattle Medium
With the holiday season underway and a new year approaching, many people begin setting goals to improve their lives. For some, that means committing to better health or productivity habits. For others, it means taking control of their finances through budgeting, saving, and setting financial goals. Whether planning to pay off debt, build savings, or simply cover everyday expenses more comfortably, developing a clear budget can make all the difference.
Sheila Winston, a Senior Business Consultant with JPMorganChase, says one of the most effective ways to get ahead financially is to understand how money is earned and spent.
“Knowing where your money goes can make a big difference,” says Winston. “A budgeting system is important because you need to be able to know where you’re at from a financial situation at all times, so it helps you to not overspend. It helps you to know if you are limited as far as the money that’s coming in so you can track properly everything that’s coming in and out of your account.”
According to Winston, budgeting prevents overspending, helps pay bills on time, strengthens credit scores, and provides peace of mind.
“It is a great tool for tracking and not overspending and getting into a negative situation. That’s where this helps you the most,” says Winston.
Winston says budgeting is not a one-size-fits-all solution. Each individual’s financial circumstances, spending habits, and goals determine the best method.
“Budgeting isn’t one-size-fits-all. It depends on your financial situation, income, spending habits, and what works best for you,” says Winston. “If you’re just starting out or want to find a method that fits your lifestyle, these tips can help you figure out your budgeting style and make the most of your money.”
Winston recommends a three-step process to organize finances and build better habits heading into the new year.
Step 1: Get Organized
Start by understanding your monthly income and listing all expenses. Group them into two categories:
Fixed expenses: rent or mortgage, tuition, phone bills, car payments • Flexible expenses: groceries, gas, dining out, entertainment, subscriptions
Winston encourages writing everything down to help prevent overspending and financial strain.
“Having a budget will keep you to the point where you are not going to be in the negative, not overspending, and it will help eliminate stress once you plan everything,” says Winston. “Even if you may not bring in a lot of income, it helps to have some type of process in place.”
People can track spending in several ways:
- Paper and Pen: A simple and visual method for those who prefer to manually write out income and expenses.
- Spreadsheets: A digital option that allows for easy adjustments and automatic calculations.
- Budgeting Apps: For JPMorganChase customers, the Chase Mobile® app offers built-in tools to simplify budgeting.
Some of the helpful features of the Chase Mobile app include:
- Autosave: Automates transfers from checking to savings accounts for goal-based or emergency savings.
- Monthly Budget Worksheet: Helps identify spending habits and areas to cut back by tracking recurring income and expenses.
- Spending Planner: A digital tool to manage monthly cash flow and make real-time adjustments.
- Chase Online℠ Bill Pay: Enables automatic and timely payments to help maintain or improve credit.
- Chase Snapshot℠: Offers a quick view of account activity, including spending patterns, balances, and credit usage.
Step 2: Find Your Savings Strategy
With fixed and flexible expenses identified, it becomes easier to plan savings. Winston recommends exploring different approaches to see what works best:
- 50/20/30 Rule: Allocate 50 percent of income to needs (housing, groceries), 20 percent to savings or debt repayment, and 30 percent to wants (dining out, entertainment).
- Zero-Based Budgeting: Assign every dollar a job so nothing is left unplanned.
- Pay-Yourself-First: Immediately allocate a portion of income toward savings or financial goals before covering other expenses.
Savings goals can include building an emergency fund, saving for a home, preparing for a vacation, or creating a financial cushion to reduce reliance on credit. Winston emphasizes that consistently putting away even a small amount adds up over time and helps protect against unexpected costs.
Step 3: Smart Spending
Once a budgeting style is in place, individuals can take small steps to stay consistent and maximize results:
- Pre-commit to saving: Set aside part of windfalls like tax refunds, bonuses, or gift money.
- Use milestones to reset: A new year, birthday, or job change is a good time to revisit the budget and set fresh goals.
Winston says tracking and adjusting is key.
“Budgeting takes practice,” says Winston. “Stick to it, you might find some categories need more money, while others need less. Keep adjusting and using the tools that work for you. Remember, your budget only works if you stick with it and keep refining as your life evolves.”
By staying organized, creating a personalized savings plan, and practicing disciplined spending, individuals can gain more control over their financial future. Winston says the goal is not to create restrictions but to build confidence, reduce stress, and empower better decision-making. For anyone looking to start the new year on a stronger financial footing, the right budget can serve as both a guide and a source of motivation.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
