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How to Build a Better Budget

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3 Ways Creating a Budget Helps You Pay Down Debt and Save

Heading into a new year brings new goals—including ways to improve financial habits and invest in a better economic future. For most consumers, paying down debt and saving more money top the list of resolutions.

Yet no matter the time of year, it’s never too late to develop a healthy relationship with your finances. It is possible to pay down existing debt and save money at the same time. It just takes a clear plan of action, some commitment, and a positive outlook.

1. Get organized and learn how to calculate a budget.

First, pull together as many of your financial statements you can find. Next, calculate your monthly income and record all income sources on a spreadsheet, which can be a useful tool for learning how to organize and calculate a budget. Last, create a list of all monthly expenses, including debts and loans. From there, organize those expenses by category—everything from your mortgage or rent payment down to your daily cup of coffee.

Determine which expenses are fixed (think: the same amount every month, such as car payments, rent, and insurance) and which are variable (i.e., what fluctuates, such as entertainment, groceries, and discretionary spending). Add up all expenses and compare that figure to the total income you generate each month. If your expenses are higher than your income, look at your variable expenses and find opportunities to scale back, such as eating out or optional streaming services.


2. Use fixed dollar amounts to budget your expenses, repay debt and accrue savings.

Aim to pay more than the minimum monthly payment required for credit cards, in particular. For example, if a credit card has a minimum payment of $50 per month, commit to pay $100 per month. Then stick to it. This way, you’ll cover the interest and start chipping away at the total balance.

As important as it is to pay down debt, it’s equally important to pay yourself. Even if it’s $50 per paycheck, figure out an amount that’s reasonable for you and your goals and sock it away in a savings account each month—preferably one that grows interest. Make it a non-negotiable payment, or set up an automatic transfer, so that money goes right into savings without a second thought. You’ll be surprised how much you can save in even one year.


3. Remember: You’re creating a budget for you. And you’re in control.

Keep a positive mindset and remember to take it one day at a time. Learning how to budget better is a healthy choice, not a self-inflicted retribution for poor financial habits. As your debts shrink and your savings grow, you’ll gradually see the results of your steadfast commitment – and you’ll likely find that each small step forward is more motivating than the last. By rehabbing your relationship with money, you can design a brighter financial future for yourself and your family.


Better budgeting and smarter savings are within reach. Check out more of Comenity’s financial resources for additional tips.

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