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  • ASJ Consulting Services

Budget and Savings

Use a budget tool to keep your spending in check

Without a budget, it’s tough to identify which expenditures or behaviors could be preventing you from achieving your financial goals. Most budgets include to main factors in their calculation:

· Total Household Income- The sum of income from all income sources being used by the household.

  • This includes wages from the contributors, rents, annuities, financial investments, or anything else that contributes to the income of the entire household.

· Total Household Expenses- The sum of fixed expenses plus variable expenses.

  • Fixed Expenses- Recurring expenses that stay the same each month, such as rent, mortgage, or car payments

  • Variable Expenses- Expenses that fluctuate each month, such as utilities or groceries.

Subtracting Total Household Expenses from Total Household income will determine disposable income. Since there’s two main factors that influence disposable income, you can increase it two ways: by earning more income or by reducing expenses.

Establish an emergency fund savings account equal to at min one month of living expenses and then build upon it.

An emergency fund savings account with up to 6 months is ideal for most. But for households with one primary income earner, those who work in industries where layoffs are routine, or if your employment future is uncertain, an emergency fund of 9-12 months of living expenses should be the min goal.

Regardless of how much you put away, the purpose of the account is to cover your bills should an unforeseen emergency such as losing a job or becoming ill happen without warning.

Saving three to nine months of living expenses can be intimidating regardless of how much you earn. The amount you’ll need to set aside each month to reach that goal depends on your financial situation. So, try to start with the goal of saving equal to one month of living expenses. After you meet that goal, continue to make regular deposits until you reach your desired savings balance.

Take steps to reduce your household expenses

No matter how much income you bring in, it will go further if its not being eaten up by unnecessary expenditures. Some living expenses are clearly necessary such as housing, food, hear, electricity, ect, but in most households there’s plenty we can live without. Some of those expenses could be putting a large dent in your budget without you even realizing.

Some ways to cut back on expenses is to minimize the number of streaming products you might have or a gym membership that drafts your account monthly but never gets used. Buying store brand items rather than name brand.

If you need or want help in putting your budget together and setting up a plan to reach your savings goals, please reach out to us and one of our accountants will assist you in making this possible and as stress free as possible.

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