What comes with every new year? A new year‘s resolution. And if creating a budget, and sticking to it, isn‘t one of them, it should be!
Here are some important reminders to keep in mind when setting up your budget. Find the budget that‘s right for you.
When looking online, there are several different methods. Whether you use Excel, budgeting software, the envelope system, or other methods, make sure it works for you.
Identify your income and expenses.
Start with what you bring home and deduct your fixed and variable expenses. The excess is your savings.
Here are a few more tips for your budget:
If you are looking to purchase a car or home, keep in mind the impact rising rates will have on your purchasing power. With rates significantly increase over the past year, the amount going towards interest will be much higher, which increases your payment.
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Let‘s say you take a vacation every year and normally spend $3,600. Is it easier to come up with $300 or $3,600? If you think about your large expenses and divide them up evenly throughout the year, you can make it easier to save.
Make it realistic.
There is nothing more frustrating than having a great budget but not being able to work within it. No one ever complained about savings more than they planned.
Track your spending.
If you don‘t track your spending, you won‘t know exactly where you are spending your money. This is a great way to identify your high spending areas and create awareness to create a realistic budget.
Prepare for unexpected expenses.
If you own a home or a car or dealt with medical bills, you know these can come out of nowhere and be expensive. Set aside money each month to cover the unexpected expenses.
TIP: If in the year you are going to pay off your debt, like a car, keep taking the same amount and put it in a savings account. You can start saving money for a new car, cover unexpected repairs or maintenance, or pay down other debts.
Review it regularly. This is one of the most important steps to make sure that your budget is realistic.
This is normally where budgets fail. If you have a bad month, don‘t give up.
For more financial wellness tips, please check out the additional videos from our financial experts.