Now that the new year is finally here, it’s a good time to start thinking about what you’ve accomplished during the last twelve months, and what you might like to achieve going forward. A new year is a perfect time to start a fresh slate with everything from your financial and spending habits, to your health and fitness goals.
If you want to make sure that you’re doing better with your money by the end of 2019, then we’ve got some tips to help you build a better budget in time for the new year.
1. Start by Looking at the Money You Have
It’s hard to make plans that will help you to save when you don’t know how much money you have coming in, to begin with. Sit down with your bank statements and find out how much you’re earning each month after taxes. This will give you a realistic idea of what you should be basing your budget on, and it will also help you to determine whether you might need an extra side job.
Once you’re finished looking at the money you have coming in – it’s time for the more difficult part, figuring out how much you have gone out. Budgeting is all about knowing exactly when and where you’re going to spend your money. Take a look at the last ninety days of your spending habits and make a list of everything you’ve spent money on. Separate your list into the must-haves, and the things that you could potentially do without.
2. Manage Your Needs and Cut Down on Your Wants
Once you have an overview of your income and expenses, you’ll also have the basic building blocks that you need for successful budgeting. Remember, the idea is that you want to spend a lot less than you earn, without missing out on any critical expenses. There are certain things that you pay for that you can’t compromise on, such as your rent and utility bills – although you might be able to get a better deal with some comparison shopping.
When you find things that you’re spending on that you “want”, but don’t “need” ask yourself whether you can cut down. For instance, if you spend $50 a week on movies and takeaways, could you begin by cutting down to only $30 a week?
3. Deal with Your Debts
Dealing with your debts is one of the easiest ways to give yourself more control over your money and your budget. The quicker you get your debts paid for, the less you’ll have to worry about finding money for repayments and interest every month. Of course, dealing with your debts doesn’t just mean paying off your loans as quickly as possible. It’s also worth making sure that you’re getting the most out of the loans that you do take out too.
For instance, take some time to compare the loans available to you online, even if you have bad credit before you commit to anything. You might find that you get a better deal when you avoid rushing into things. If you have some debts that you’ve been holding onto for a while now, you might even be able to reduce costs by consolidating them into a different loan.
4. Plan for Everything
One of the biggest mistakes that people make, is assuming that their budget is airtight and leaving no room for mistakes or forgotten expenses. When you start your new budget in time for 2019, make sure that you leave a buffer in place to deal with irregular and unexpected expenses. Ultimately, no matter how good you are at planning, there’s always a chance that something will crop up that completely scuppers your plans.
Think about the things that you need to pay for less frequently than every month. For instance, have you put money aside to pay for your water bills, what about things like repairs or insurance for your car? Maybe you need to put a strategy in place to save up for next year’s Christmas presents too!
5. Find a System that Works for You
Once you’ve got your budget and your plan ready, the next step is simply finding a strategy that works for you. Some people decide that the best way to avoid over-spending is to take a specific amount of cash out of their bank account and split it into envelopes for certain expenses throughout the week. Other people simply track every penny they spend using a mobile app and review their spending at the end of each month.
The truth is that there’s no one-size-fits-all strategy for budgeting, you have to find what works best for you.