New Year, New Budget Tips!
With each passing year, people set out new resolutions for how they are going to live their life. The New Year is also a good time to reevaluate certain things in life. For example, it is recommended that you look again at insurance coverage to make certain your home or automobile have the best coverage for the best price. The New Year is also a great time to focus on a new budget. Just as with other financial considerations, your budgeting goals can change with time and it is important to stay on task. As the New Year approaches, consider these fresh budgeting tips.
Set a Goal for Your Budget
Budgeting without a goal in mind is really a pointless exercise. Sure, you will figure out how much money you make and how much of it you spend, but if you do not have a goal for that insight gained then you are just wasting your own time. If you do not use that information to achieve a better financial future, you are simply watching yourself fall into debt or just muddle along. So, set a goal for your budget.
There are no right goals and wrong goals for your budget, merely those goals that you wish to achieve. Mint.com points out several goals such as saving to start an emergency fund, pay off debt, invest, or save to send your kids to college (if you have kids). Before you bother budgeting, think about the things you would like to achieve from doing so.
Find Out Where Your Money Goes
A lot of people often find when budgeting that their bank account is a bit like a sinking boat. You know how much you make and hopefully you are aware of your major expenses (mortgage, auto payments, etc.), but are you aware of all the tiny leaks that are trying to sink your financial boat. Examples include, a coffee habit that has you stopping at the local coffee shop 4 times a week or an aversion to cooking at home that results in dining out three or more times a week. Each cup of coffee or meal may not seem expensive on their own but added together over the course of the month could prove devastating to your financial stability.
A budget is a great way to lay out all your sources of income against your expenses. You will be able to identify regular, necessary expenses such as rent/mortgage, car payments, groceries, and utilities, and compare those to expenses for dining out, entertainment, and any possible frivolous spending.
Keep Track of Your Budget
Finally, it is not good enough to simply make a budget, you have to be willing to track that budget as well. As mentioned earlier, your budget is going to provide you with useful insight into your income and spending habits. How you use that information will determine whether or not you are financially successful. Use your budget to track your ability to cut down on open lines of credit and outstanding debt, and then figure out how you can redirect that money toward achieving the stated goal of your budget.
Make your finances work for you. Hughes Warren may be able to help you refine your budget today!