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Creating a budget is an essential, yet often overlooked, pillar to achieving financial stability. Budgeting can help you to prioritize your spending, prevent overspending, save for the future, reduce financial stress, as well as provide a sense of control over your finances. With inflation costing the average household an additional $296 every month, it’s important now more than ever to take a proactive approach to controlling your finances.
Even if you’re familiar with budgeting, it may be a daunting task to create and maintain a budget – let alone consistently stick to it. That’s why we created this article to help you understand how to create a realistic budget as well as tips for ensuring you meet your financial goals.
1. Understanding Your Income and Expenses
When creating a budget, it can be easy to focus on only tracking expenses rather than income. But, it’s just as important to track all sources of income for your household as well. Doing this will help you create a more complete budget and can help you prepare for tax season.
It’s easy to think you have a clear understanding of your spending habits. But, once you sit down and take inventory of all fixed and variable expenses – you may be surprised to find your spending habits are different from what you had in mind. Having that clear understanding of your spending habits will help you create a more realistic budget that compliments your lifestyle.
The first step to tracking your expenses is keeping records of your monthly expenditures.
Fixed expenses are recurring costs that are the same each month, such as rent or mortgage payments, car payments, and insurance premiums. Unlike fixed expenses, variable expenses are subject to fluctuating month to month. This can include groceries, holiday or birthday gifts, utilities, transportation, and entertainment. All of the expenses listed above should be tracked and reviewed on a monthly basis. Juice cardholders can simplify tracking and managing expenses by downloading the Juice app on the iOS or Google Play store.
If the idea of tracking all of these different costs overwhelms you, consider using a budgeting app or spreadsheet to help you automatically categorize and track expenses over time. Find a budgeting app that works for you with this comprehensive list Nerdwallet put together.
2. Setting Realistic Financial Goals
Having a realistic financial goal can help you prioritize your spending and avoid splurging on unnecessary temptations. It also provides you with the ability to measure your progress over time. Being able to see how far you’ve come can help you stay motivated and committed to achieving your goals.
When setting financial goals, using the S.M.A.R.T. acronym can help you create a strong foundation you can build upon.
S – Specific
M – Measurable
A – Achievable
R – Realistic
T – Time-bound
Another way to help set realistic financial goals, especially for long-term goals, is focusing on creating progressive shifts. This gives you the room and flexibility to grow and adopt new habits as you work towards your goal. For instance, if your goal is to make an expensive purchase down the road, you can start by putting away only a small percentage of your income. Once you’re more comfortable with reducing your spending habits, you can incrementally increase the amount you’re saving for this purchase.
Don’t let unexpected expenses throw you off track and discourage you from achieving your financial goal. It’s less about if a financial surprise will occur and more about when. Accepting the fact that there might be setbacks to achieving your goal will allow you to quickly overcome any obstacles.
Without the guidance of a budget, overspending and underspending are more likely to happen. Not only does budgeting help you achieve your goals, but can be helpful for setting goals as well. With the clear picture a budget can provide, you can easily determine if the goal you’re setting is S.M.A.R.T..
3. Creating a Budget that Works for You
When choosing the right budget, here are two common methods to consider.
- The 50/30/20 method offers the flexibility to pay off debt, cover current expenses and save for future expenses. It divides your income into three categories: 50% goes to necessities, 30% for wants, and 20% for building savings and paying off debts.
- The Zero-Based Budget method provides a detailed and deliberate approach for those who have the habit of overspending or for the diligent planners who enjoy a strict strategy. This type of budget requires you to allocate every dollar you earn until there are zero dollars left. A zero-based budget can be time consuming and adopting this method may be difficult if your income varies from month to month.
With these two methods in mind, reflect on your current financial situation, financial goals, spending habits, as well as how much time and effort you’re willing to commit to expense tracking. Keeping these things in mind should allow you to choose the budgeting method that works best for you.
4. Staying on Track with Your Budget
Once you’ve chosen your budget, the next step is staying focused and on track to reaching your financial goals. This requires you to regularly review your budget and make any necessary adjustments. Without this upkeep, monitoring your progress is nearly impossible to do.
Your path to achieving your financial goals will not be straight, you’ll most likely run into some unexpected hurdles. It’s okay if this happens, as long as you aren’t discouraged and recommit to your budget.
Common challenges you’ll likely experience while budgeting are unexpected expenses like car repairs or medical bills. Building an emergency fund into your budget can help you prepare for these kinds of concerns. While reflecting on why you’re budgeting in the first place can deter you from making any frivolous purchases. Or having a visual representation of your financial goal – perhaps on your fridge or mirror – will remind you what you’re working towards and help you stay motivated.
Reviewing your budget on a monthly or bimonthly basis will help you identify what areas could use improvement, if you’re going to reach your goal in a timely manner, or if it needs to be adjusted to a later date. Throughout the year, you’re bound to have recurring expenses that fluctuate, taking changes like this into account are essential to having a complete understanding of your finances. Consistently reporting your expenses will help you achieve this transparency.
5. Build Your Budget with Confidence
Budgeting is a powerful tool that can help you gain more control over your finances while allowing you to achieve your financial goals. While the steps to create a budget may seem lengthy – like taking the time to thoroughly assess your income and expenses and choosing a realistic goal – you’ll be thankful for an accurate and attainable plan later.
Attempting to achieve financial stability and success without a budget is like trying to drive to an unfamiliar destination without directions. It’s easy to get lost, and you may be late or never arrive at all. A budget provides guidance and clarity that’s essential to understanding and improving your financial situation.
Take charge of your finances and put yourself in a position to succeed!
If having more control over your finances is something that appeals to you, consider using the financial tools and benefits offered to Juice cardholders. If you’re an existing Juice cardholder, be sure to download the iOS or Android app. Doing so is a great way to stay “in the know” with your income and spending. And if you’re not already with Juice, consider talking with your employer today about the many benefits Juice offers employees and employers alike!
What is Total Rewards?
What really is total rewards? Total rewards is a comprehensive approach to compensation that encompasses all the monetary and non-monetary benefits and perks employees receive along with their wages. Examples of these benefits include bonuses, health insurance, paid time off, development opportunities, flexible pay options, and more.
It’s more important than ever for employers to become knowledgeable about total rewards. In today’s economic climate, employees are prioritizing benefits that meet their needs and align with their values. If an organization is unwilling to meet the needs of its employees, it leads directly to disengagement, burnout, and eventually turnover.
On the other hand, organizations that embrace the needs of their employees are thriving. By crafting a healthy workplace culture and providing a well-designed total rewards program, your organization can see increased rates of motivation, productivity and employee satisfaction.
Creating a Total Rewards Strategy
A successful total rewards strategy begins by considering the needs and desires that contribute to overall employee satisfaction. There are a wide variety of options available when it comes to the benefits and perks that can be offered as part of a total rewards program.
In this section, we provide an overview of three of the most valuable rewards that organizations can offer to support employees and develop a positive work environment. These strategies include:
- Employee Wellbeing
- Employee Development
- Flexible Compensation
By implementing these strategies as part of a total rewards plan, your organization will demonstrate their commitment to your employees and foster a workplace culture of productivity and high performance.
Investing in Wellness
Employee wellbeing, including physical and mental health, is central to overall performance and productivity. In fact, teams who have high engagement ratings see a 41% reduction in absenteeism and 59% less turnover. These statistics underscore the importance of caring for employee wellbeing from a humanitarian perspective as well as a financial one. As part of a total rewards strategy, organizations can offer benefits like a gym membership, mental health support, or a wellness stipend. When employees feel that their health is a priority to leadership, they feel an overall sense of support within their work environment. By creating an atmosphere of genuine care, your team will be encouraged to actively engage at work. Employee wellness programs assist employees in managing their stress, physical health, and keep them motivated. Prioritizing the health of your employees ultimately leads to a more productive and engaged workforce.
Empowering Personal Growth
Employee development is a mutually beneficial perk for both employees and your organization. Opportunities for professional growth and advancement, such as online courses or in person training events, help employees achieve their career goals and improve their skills. As your team grows through professional development, their newly learned skills will directly benefit your organization. With a team of well-rounded individuals, your organization will be better equipped to tackle challenges, capitalize on opportunities, and achieve overall goals. Employee development is not only a perk for employees but a wise investment for the success of your organization. Offering a professional development stipend is a simple way to pour back into your team and encourage the improvement of their overall performance. By providing employees with the tools to grow professionally, you can help foster a positive work environment and increase the overall satisfaction and commitment among your team members.
Providing Flexible Compensation
Offering flexible compensation options can help employees better manage their finances and reduce overall stress. Referencing the importance of employee wellbeing, financial struggles contribute to disengagement and eventual turnover. Benefits such as earned wage access (EWA) provide stability and security for your employees, ensuring that they will have their income available when it is needed. EWA is a benefit that is rising to the top of frontline workers’ priorities. A recent study found that 91% of millennial workers and 82% of Generation Z workers stated that it was fundamental for their employer to offer earned wage access. Juice offers re-loadable employee payout cards that support earned wage access by allowing funds to be deposited and available instantly. These neo-banking accounts can also be used for depositing bonuses as well as wages, giving employers the ability to reward their team at any time. Providing flexible compensation options, including earned wage access through a Fintech solution, can be a deciding factor when it comes to employee turnover. By fairly compensating your team and offering them wage flexibility, you may be able to reduce financial stress that can influence employees to leave. Offering EWA as part of your total rewards strategy can also enhance your reputation as an employer, helping you to attract and retain new team members in the future.
The Real Question "What is Total Rewards?"
Answered
So, what is total rewards? Total rewards go beyond wages to include a variety of monetary and other benefits to compensate for the loyalty and dedication of your employees. To be able to fight against the rising rates of resignations, organizations have to consider the specific needs of their employees and how they can best meet them.
Strategy focused on total rewards tis necessary for employers who want to attract and retain engaged, productive employees. By prioritizing employee wellbeing, encouraging professional development, and ensuring wages are easily accessible, you can craft a compensation package that truly meets the needs of your team.
The financial benefits of implementing an inclusive total reward strategy are tangible. Improved rates of high-capacity performance, committed team members, increased profitability, and reduced absenteeism are only a few of the gains your organization can achieve. As the needs and priorities of the workforce continue to change and evolve, the importance of a total rewards strategy will only rise.
So how do you go about implementing a total rewards program that serves your employee’s needs?
Juice’s FinTech solutions can help your organization bring your total
rewards strategy into the modern era. Our solution provides a
no-minimum-balance digital neo-banking account that includes earned wage
access and other zero cost employee benefits that would normally cost
thousands annually.
Interested in seeing if this solution could be a game-changer for your employee benefits? Learn more about Juice’s modern FinTech platform that 15,000+ companies trust!