Budgeting

On This Page, You Will Learn To:

Create a personalized budget that fits your income and needs
Manage and repay debt, including IOM loans, responsibly
Plan for emergencies and meet goals

Creating a Budget

Steps to Create a Simple Budget

Managing and Repaying Debt Responsibly

Smart Repayment Strategies

The 50-30-20 Rule

Setting Goals

Tips for Sticking to Your Budget

Creating Your Own Budget

Creating a Budget

A budget is a plan for how you'll spend and save your money. It shows how much comes in (income) and how much goes out (expenses). Creating a budget helps you see where your money goes and make sure you have enough to cover your needs.

Steps to Create a Simple Budget

List your income: Write down all the money you earn each month (your paycheck, benefits, assistance, etc.)
List your expenses: Including both fixed costs (rent, utilities, loans) and variable costs (groceries)
Compare income and expenses: Make sure your income is higher than or equal to your expenses
Adjust if needed: If you spend more than you earn, look for areas to reduce or save

✏️ Let's Practice!

Grab a piece of paper and, using the information provided in the following scenario, list the incomes, expenses, and compare them.

Maria works at a grocery store and earns $1,800 per month. In addition, she receives $200 from a family member each month. Her monthly expenses are rent $1,000, food $300, phone plan $50, and other miscellaneous expenses $100.

Here is a potential format you could use to organize her budget:

Based on the balance (income - expenses), does she have extra money at the end of the month? If yes, what would you suggest she do with it?

Managing and Repaying Debt Responsibly

For many newcomers, the first debt in the United States is the International Organization for Migration (IOM) travel loan. Although this loan is interest-free, repayment is required. Understanding how to manage it–and any other debt–helps you stay in control of your finances.

The IOM Loan

The IOM loan covers the cost of your travel to the U.S. and must be repaid to support future refugees in their travel to the U.S.

This loan is interest-free, meaning you only pay the amount that you borrowed. Other loans you may receive while in the United States of America will have interest, meaning the longer it takes for you to pay the loan back, the more money you owe.

For the IOM Loan, repayment usually begins 6 months after arrival. The government assumes that within 6 months, you will be able to be more financially stable so you can repay them. If you do not prioritize repaying this loan, it may impact your ability to build credit or qualify for other loans while in the United States.

Smart Repayment Strategies

Add your IOM payment to your monthly budget.
Set up automatic payments or phone reminders.
If you struggle to pay, contact IOM for a payment plan adjustment. Never ignore notices received from your loan providers.

Example:

Many families begin their financial journey with an IOM travel loan. Hassan borrowed $1,200 for his family's travel. After saving $100 each month, he made an extra $200 payment using his tax refund. This helped him finish repayment 2 months early.

✏️ Let's Practice!

Grab a piece of paper and make a plan for your own IOM repayment!

The 50-30-20 Rule

The 50-30-20 rule is a simple way to manage your money. This rule helps you see clearly where your money goes, helps you avoid overspending, and helps you plan for your goals. It divides your income into three categories:

50% for Needs – these are essentials such as housing, food, utilities, and transportation.
30% for Wants - these are things that make life enjoyable, such as dining out or hobbies.
20% for Savings or Debt Repayment - this includes saving for emergencies, education, or paying off loans. (Even small savings each month add up over time.)

Example:

Daniela, who moved from El Salvador, earns $2,400 a month. She spends about $1,200 on needs, $600 on wants, and saves $480. This balance helps her cover her bills, enjoy her hobbies, and prepare for the future.

Setting Goals

Budgeting is not only about today. It is also about planning for tomorrow. Setting financial goals helps you know what you are working toward. Goals can be short-term (within the next few months), medium-term (in the next 1-3 years), or long-term (3+ years).

Examples of Goals:

Short-term: Save $200 for school supplies, buy warm winter clothes. OR save $100 for future emergencies.
Medium-term: Save $7,000 for a used car, pay off a small loan, or set aside money for ESL or job training classes.
Long-term: Save for citizenship application fees, buy a home, or build a strong emergency fund.

When you connect your budget to your goals, every dollar you save has a purpose. This makes it easier to stay motivated and see your progress over time.

✏️ Let's Practice!

Grab a piece of paper.

First, we will set goals for you/your family. Write down one short-term, one medium-term, and one long-term goal.

To help you think about your goals, consider:

How much money do you need to cover your expenses?
How much money can you save each month?

Tips for Sticking to Your Budget

Review weekly: Spend a few minutes checking your spending each week.
Set reminders: Add goals to your phone calendar.
Be realistic: If you overspend one month, learn from it and adjust next time.
Reward progress: Celebrate small wins, especially when you meet your goals.

Creating Your Own Budget

Now you are ready to make your own budget! Here is a link to a budget template that you can use. You can fill out the budget online, or print it out if you prefer working on paper.

For the budget, first, you will fill out the projected columns for the NEXT month. This will help you plan out how you intend to spend your money. Throughout the month, fill out the actual costs, and at the end of the month, calculate the difference (project - actual). After each month, reflect. What did you learn about your spending habits? What can you do to improve next month?

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