Michael Wolfe of Greenville SC works with individuals and families in financial planning. One of the critical elements of building a retirement nest egg, children’s education fund, and legacy planning is proper budgeting and saving. For many, budgeting and saving starts with recording expenses and keeping track of spending, from monthly bills to entertainment.

Organize records by category, such as mortgage, groceries, gas, and car repairs. Then, identify areas with excessive spending and opportunities to save. While savings should begin comfortably, work toward a monthly goal of 15 to 20 percent of income. Some may need to make sacrifices like delaying a big ticket purchase, taking a modest vacation, or foregoing a daily coffee shop brew. Eating out accounts for the largest recurring expense for families that benefit from meal planning at home.

Next, stay current on debt. For those with multiple lines of credit, focus first on non-tax-deductible and high-interest-rate debt, such as credit card balances. Find low-hanging debt mitigation routes by identifying recurring charges, such as forgotten online subscriptions, and cancel them. Strive to attain a debt-to-income (DTI) ratio of 20 percent or 35 percent for individuals paying off mortgages of income. For example, a family with monthly required debt payments of $600 and a combined income of $4,500 has a DTI of 13 percent (4,500/600), which falls into a healthy debt situation.