Five Tips on Budgeting For 2018- Fiona Dwyer
Budgets are a great way to help you reach your financial goals and the beginning of the year is the perfect opportunity to create a new or re-vamped budgeting strategy that suits your current lifestyle. Here are 5 steps to create your best budget and start off 2018 with confidence.
- What’s Your Household Income
Find your total gross income (before any taxes or savings) from all revenue sources. This helps you to track every dollar in your budget. Take a few minutes to think through anything that may have changed your income this year such as getting a raise or switching jobs. Be sure to also include income from any part-time positions or side jobs in this step as well.
- Consider Your Expenses – List them
Write down all of your reoccurring monthly financial obligations with their dollar amounts such as mortgage or rent, car payment, Netflix subscription, student loans or gym membership. Then move on to more fluid expenses like food, entertainment, utilities, and gas. Include insurance, dental bills, haircuts and shopping on this list as well. Now look at this list and consider getting rid of what you don’t need
- Find the Difference
Monthly gross income minus monthly expenses. Are you spending more than you’re earning each month? Do you have enough cash flow left for taxes and savings? If you’re looking at a negative number, remember it’s never too late to change bad habits. Instead of focusing on what you’ve done wrong, focus on how to improve.
- Create Your Realistic Budget
You’ve now laid out where your money is coming from, where it’s going and what you need to do to improve spending and savings habits, you’re ready to put together your budget. If you need to alter your expenses, figure out what you can afford to remove or lower in order to reach your financial goals. Consider finding ways to increase your income like a part-time job or hobby you can use to make money. Write out a realistic budget next to your current spending habits so you are able to easily see the changes you need to make and hold yourself accountable by setting a resolution with completion dates.
So now that you have a budget, here’s how to stick with it.
- Commit to One Hour Per Month on Financial Planning
A budget is worthless unless executed on a consistent basis. Don’t give up completely when unexpected expenses (such as car maintenance) throws off your budget, make sure you’ve set at least an hour aside each month to review and revise your plan in case of any surprise expense. During this time, you’ll want to plan out how you’ll adapt your budget based on the circumstances while still being consistent with your savings.
Consider setting a daily spending limit to help keep you on track throughout the month. Setting a daily spending limit makes it easier for you to spot when you have overspent and allows you a chance to compensate for that overspending. Happy New Year!!!