How to Build Your First Budget
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How to Build Your First Budget as a Military Family

June 17th, 2019 | 5 min. read

There’s more to building a budget and saving for financial goals than just cutting back on spending.

Living on a budget may sound restrictive, but it actually provides the opportunity for more freedom than you would otherwise have. By knowing where your money is going each month and categorizing your goals, you can plan for a future with more abundant opportunities. Being prepared is key.

When building your first budget, consider these ideas:

Start by tracking your spending so you know where your money is going. One of the best ways to do this is by looking at your bank statement and writing down all of your expenses for the past month. Then sort your expenses by categories and use highlighters to color code them. For example, you may choose to highlight necessary expenses like rent or mortgage, utility bills and insurance in yellow, frivolous expenses like clothes, dining out and event tickets in orange and investments or savings in blue. The number of categories you have will depend on your unique financial circumstances, but adopting this approach will give you a clear indication of where your money is going each month. This can help you identify problem areas and will give you a starting point for building your budget.

Assign your expenses to your income. By assigning certain bills to specific paychecks, you can keep track of spending and know when each bill will be paid and what will be left over. This method of budgeting can help you be more methodical about frivolous spending because you will know exactly how much is left over from each paycheck after taking care of bills, investments, retirement and savings.

Build an emergency savings fund. Life doesn’t always go as planned. That’s why it’s imperative to set aside some rainy day funds. Most experts recommend saving three to six months of income to fall back on when unexpected expenses pop up. While three to six months of income may seem like a lot, regularly adding to your emergency fund will help build that amount little by little. Just remember – this isn’t your vacation money or money you should spend on that expensive new pair of sunglasses you just couldn’t pass up. It’s for those true spending emergencies. Like fixing the brakes on your car or paying for a plane ticket home if you’re suddenly needed there. It might also help to set savings goals and forecast the amount you will have saved by the end of the year or in five years. Seeing your savings grow can help motivate you to stick to a schedule. Use this savings calculator to help you plan.

Pay yourself first. It’s important not to forget yourself when budgeting. So don’t save what’s left over at the end of the month (as if there is anything left over most months!) – pay yourself first by allocating money to your long-term goals. Then figure out how to live on what’s left over.  One option for building retirement funds is to enroll in the Thrift Savings Plan (TSP). The TSP is similar to a 401(k) in that it allows you to set money aside on a pre-tax basis. If you are in the Blended Retirement System (BRS), you will also receive matching contributions on the first five percent you contribute, and an automatic contribution of one percent. As long as you have been in the service for at least 60 days, you are eligible to contribute to the TSP. More information on the many options and benefits associated with this program can be found here.

Overpay on credit cards to tackle debt over time. Managing debt is important to consider when building a budget. If you have credit card debt, allocate extra funds to your monthly payments so you can tackle the debt over time. When you make the minimum monthly payment, you’re just treading water. By paying more, you can work to actively lower the total debt. This principle also applies to student loans, medical bills, or any other payment plans.

Work with a Financial Advisor. A Financial Advisor can help you build a budget, plan investments and teach you how to save money for retirement, college or other financial goals. Four out of five First Command Financial Advisors are veterans or military spouses. They understand military family finances and offer complimentary financial planning to active duty military.



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