Beginners Guide to Budgeting in Vermont

Given the current economic situation for so many of us right now, this is a challenging article to write. Between rampant inflation, stagnant wages, and a lack of affordable housing, money is a touchy subject. For instance, Vermont’s current minimum wage is $13.18 per hour. If you make minimum wage in Bennington, work 40 hours per week, year round, your gross income would be $27,414.40. Using the traditional rule of thumb that your rent should be 30% of your income, that means that you’re housing budget for Bennington would be $685.36 per month. In the past month, I’ve seen one rental property in Bennington listed for below $1,000 per month (it was $950). Despite this obvious disparity, no matter your current economic situation, I think there will be at least one suggestion in here that might help you budget or consider money different. I hope that it will help

Use the 50/30/20 Rule: This is sort of the golden rule of personal finance. The idea is that 50% of your monthly income should cover your needs, 30% covers your wants, and 20% goes to savings, retirement, and paying off debt. Your “needs” includes rent, utilities, food, transportation, insurance, and child care. Your “wants” include travel, subscriptions, entertainment, and meals out.

The first thing you’ll need to do is figure out what your income is each month after taxes come out. Let’s go back to our minimum wage, full time employee as an example. If you’re making $27,414.40 per year, that equals about $2,010 after taxes come out. Based on this income, $1,005 would go toward your needs, $603 goes toward your wants, and $402 goes toward savings and debt repayment. Using this rule can be a good guide to make sure you’re “living within your means” but it can also be disheartening in this economy to see what your needs are.

Track Your Expenses: Start by recording all your income and expenses to understand where your money is going. What percentages of your income last month went to needs and wants? Were you able to set any aside in savings?

Prioritize Needs Over Wants: Ensure essential expenses like housing, utilities, and groceries are covered before allocating funds for discretionary items. The 50/30/20 rules is nice, but it can be flexible. Experts say to keep the 20% as solid as possible and instead divert funds from your want allotment to needs if necessary.

Use Cash Envelopes: If it worked for grandma, it can work for us, right? If you have trouble not spending your paycheck each week, try this instead: set that 50% aside into envelopes marked specifically for rent, utilities, etc. Want the modern approach to this? Set up a number of bank account equal to the number of funds you need. Each paycheck, you can set aside money for your various needs without worrying about overspending.

Cook at Home: Preparing meals at home is usually cheaper and healthier than dining out. If you’re working long hour and/or you have kids, this can be a major challenge. Be kind to yourself and do the best you can. Even if you can meal plan for a few meals per week to avoid getting takeout, you could end up eating healthier while saving money to make paying that skyrocketing heat bill easier.

Shop Around for the Right Bank: Vermont has some excellent local credit unions which typically offer accounts with no or small fees as well as modest returns on saved money. Some banks may waive ATM fees from outside ATMs or provide other services you find hepful. In Bennington, VSECU might be a good option for you.

Use Budgeting Apps: If you’re a phone addict or a tech junkie, explore some budgeting apps on your phone or laptop. You might find something that works well for you.

Regularly Review and Adjust: Revisit your budget after a month or two to assess your progress, make adjustments, and stay on track. If you mess up - that’s okay! Try not to get discouraged and instead figure out what you can do different next month. Maybe you can try cooking more meals at home or you can save money on food by clipping coupons. Keep trying new things to see what helps!