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Yes, You Need a Budget in 2022 (and it will be easier than you think!)

Is one of your New Year’s resolutions to handle your money better in 2022? The secret may lie in creating a budget. In fact, according to a Debt.com survey, 88% of people who budget say it keeps them out of debt. And budgeting is actually easier and less painful than you would think. Here are four steps to becoming a better budgeter that will help you begin 2022 feeling financially confident.

1.  Reframe your mindset toward a budget.

It’s easy to assume a budget will be punitive, but you’d be surprised at the benefits you’ll realize when you change your perspective. Instead, consider it an ally in your financial wellness that actually offers you permission to spend.

Here’s what we mean: At first, you might assume you shouldn’t join friends for dinner because you’re presuming that money should be going to a car payment or rent. That makes you feel guilty if you do. But when you make a budget, you’ve already allocated funds to those areas, and therefore you know exactly how much money you can spend on eating out without eating into other necessities. So go ahead and order that appetizer…it’s already included in your budget so you can enjoy it guilt-free.

2. Try a simple formula to create your budget.

Seems more appealing to live within a budget when you think of it that way, now, doesn’t it? But you’re probably wondering how you know exactly how much you have left to spend on eating out, once you’ve paid for the other aspects of your livelihood.

While there are multiple ways to create a budget, it doesn’t have to be an overwhelmingly complex math assignment. One straightforward method is known as “50/30/20,” which creates a simple but useful budget.

Here’s how it works:

First, add up your after-tax income to arrive at the total amount you have available every month. Then divide it into three buckets: 50% of your budget to “needs,” 30% to “wants” and 20% to savings.

Here’s how those categories might break down:

  • 50% for housing, insurance, car payments, utilities, childcare, commuting costs and debt payments
  • 30% to hobbies, entertainment, clothing, gifts and recreation
  • 20% for retirement savings, life insurance and your emergency and vacation funds

If your “needs” category is so big that it overpowers the rest of the budget, you might decide to make some cuts, such as deciding to see if you can make do without a second car, particularly if you or your partner is primarily working from home.

When your “needs” override your “wants,” it’s almost a surefire way to end up blowing your budget. Everyone deserves some “fun” money, and a splurge now and then – especially if it’s planned – can help keep you on the path to long-term budget success.

3. Track your budget.

Putting together a budget is just the first step; now you must keep a record of what you’re actually spending to identify any pitfalls. Since most of the expenses in the “needs” category, such as rent and car payments, are usually “fixed,” (meaning they are roughly the same every month), you’ll particularly want to keep an eye on the fluctuating “wants” area.

For example, if you blow all your entertainment money on a concert early in the month, you’ll have to compensate by avoiding your weekly Friday lunch for a while. Forgoing that reward might cause you to decide to disperse the fun money more evenly the following month.

There are lots of ways to monitor your budget. Many people choose to use an app like You Need a Budget, which helps you track goals and creates graphs and charts so you can see where your money is going. Another option is the app Mint which helps you visualize your finances by letting you add your cash, credit cards, investments, and bills. You also can just jot down your expenditures in a small notebook or in the “notes” function on your smartphone or tablet to reconcile later in the month. Make sure you download Old National's mobile banking app,1 which allows you to see recent transactions.

As you begin learning to live with a budget, you’ll have the most success by using your debit card (or credit card if you commit to paying it off in full each month) rather than cash, which is harder to track. If you prefer to use cash, some people find success putting their allotted funds in labeled envelopes, such as “groceries” or “takeout,” and when it’s gone, it’s gone.

4. Revisit and recalibrate.

A budget can’t be a “set it and forget it” exercise because things are always changing in your financial life. By reviewing your actual spending, you can identify areas where you should allocate more or cut back. For example, you might have originally earmarked $100 a week for groceries, but if you’re constantly overspending, it’s clear that’s unrealistic and you need to make some accommodations.

Perhaps you need to move some of your entertainment fund to the grocery fund – and then make cooking at home more of a special occasion. Or, you might decide you’d prefer to find ways to cut the grocery bills, such as shopping at a less expensive store, using coupons, or choosing cheaper brands or meals, such as eating less meat. On the other hand, you might decide you’d rather take on a side hustle, like driving for a food delivery service, one night a week to pay for your evenings out.

As the year progresses, you might find yourself with a small windfall…maybe you received a quarterly bonus or a tax refund, or earned a raise that bumps up your income permanently. Rather than just allowing that money to be absorbed in your bank account, use your newfound budgeting knowledge to determine where you’d like to designate it. You may decide to increase your retirement savings or emergency fund or put it toward the gym membership you’ve been coveting. Making these decisions thoughtfully reminds you that you are in control of your budget, not the other way around.

Financial wellness is a key factor in our overall well-being, and creating and following a budget gives you confidence that you’re on a wise and sustainable money management pathway for 2022. For more personal finance advice, visit Old National Bank’s We Have Ideas portal today or visit a branch and speak to a banker.


1. Mobile Banking requires that you download the Mobile Banking app and is only available for select mobile devices. Message and data rates may apply.

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