The New Year is an exciting time for all because of the change it brings. Consumers are motivated in the New Year to make positive changes in their lives, and to make it the best year they’ve ever had. It’s easy to feel the motivation to make positive changes when positive change is in the air, and that often means creating a new budget and working hard to stick to it. If you’re in the market for a new start in the New Year, it’s not too late. You have the power to learn to budget your money effectively. There are numerous complicated budgeting systems, apps, and websites out there for you to use, but sometimes it’s the simplest plan that works the best.
A simple list of your take-home pay each month and your outgoing money each month is where you start. Know what you make versus what you spend. Write it down. Divide it into categories, such as the dates you’re paid and the dates your bills are due. Now break that all down into two of each. Assuming you’re paid biweekly, you have income every two weeks. If you break your bills down into two-week due dates, you’ll find it’s much easier to pay them.
For example, if you’re paid on the 1st and 15th of each month, break down your due dates to pay each expense on those dates, too. It helps you stick to the budget and stay on track. You can also break down your shopping trips to the grocery store around your pay periods to further stay on track.
Now you know what you owe and to whom each month, it’s time to minimize those bills. Can you apply for a new credit card with a great 0% APR introductory period on all balance transfers so you can pay off that debt quickly and without paying more than necessary? Can you call your cable company and cancel your contract since you use Netflix instead? Can you call the cell phone company and lower your plan, or call the internet company and ask for a discount so you aren’t forced to switch to a new company? You have options, and now is the time to take advantage of those. You might be surprised how much you can save.
Create Necessary Funds
If you’re not already paying yourself, you’re doing yourself a great disservice. It’s time to create a savings account to which you transfer money each month before you pay anything else. You’ll also need to create an emergency fund for emergencies. You’ll also want to create savings accounts for all the other little things you want to save for this year. This does work to make life much in terms of budgeting.
Budget for Others
Now that you have a budget for your expenses, you’ll need one for other things. The best way to stick to a budget is to determine how much you’re comfortable spending on any given item at any given time. Sit down and really break down what you feel comfortable spending on entertainment, clothing, personal items, and other things throughout the month. These are the least important things in your life, so they should be the last things you budget for to make room for all the other things you budget for. Perhaps you can use a cash method for these things, or you can track your expenses with an app so you know when you’re over your budget or getting close to it.
Creating a budget and sticking to it is much easier when you are able to do it for a month or two. It’s always easier when it becomes a habit. Habits take approximately 21 days to form, so don’t be too hard on yourself if you struggle for a while. It’s also important to remember not to deprive yourself. Your budget should be strict, but it shouldn’t deprive you of your favorite things or from enjoying your life on occasion. If you love Starbucks, create room in the budget to enjoy a coffee once or twice each week so you don’t feel you’re missing out on your favorite life moments.