The New Year is upon us and it is time to come up with a plan. For many, “Sticking to a budget” becomes a New Year’s Resolution. The best way to make your resolution into a tangible goal is to come up with a strategy for getting the job done.
When creating a money plan for the New Year, it may be helpful to budget out your money by the month. Start with all your bills. Write down everything you will have to pay, such as your rent, electricity, or cable and wi-fi. Check your credit card statement for any of those sneaky subscriptions that you might not remember you have. Add in whatever dreaded debt needs to be accounted for, unfortunately, the monthly check to pay off student loans cannot be forgotten. Add these bills up to know a good starting point of how much of your money is already spoken for.
Next, add in a good estimate of what your grocery allowance is each month. If you eat out often, that spending should be estimated in here also. It may be easier to calculate groceries and food spending per week and multiply by 4. If you don’t have a good estimate, go out to the store and buy what you think you will need for the following week. Multiply this by 4 for the month total and add this to your bills calculation.
Now… Take a moment for inventory.
Are you happy with the amount of your income that is already spoken for each month? If the answer is no, maybe consider dropping your cable package or turning down the heat a couple of degrees in the house. See if there is any way to cut back in places that you feel you are spending too much money.
Each month it is important to also set aside a little money for spending, travel or holidays that may occur that month. For example, prepare for Christmas even months early. Saving “a little here and a little there” can bring December from a month of debt and stress to a carefree, happy holiday. There will be less stress when the fun things occur if you financially planned for them from the beginning.
Depending on your income and how much wiggle room you have each month, you may consider investing some of your money, or setting aside for your retirement. (The day will eventually be here!) Come up with a plan for what you feel is right for where you are now. Even investing small amounts can reap big rewards someday. Don’t be afraid to set a sum of money each month that you would like to put into a mutual fund. If you have the means to do so, investing can be even more beneficial than saving.
If you aren’t interested in investing, saving money each month is still the key. Not having to stress each month is the goal, so save whatever you can as you pay off those bills. Living within your means is good, but living beneath your means is great. Save, save, save, so that someday you will have that money to spend!