Budgeting Tips for the New Year
As 2018 approaches, you may be thinking about setting up a budget for the new year. Whether you want to use a physical system or a virtual one, budgets are an excellent idea for every family. They can help you see where your money is really going, and they can help you curb spending to allow more money for saving.
What is Budgeting and Why Is It Helpful?
Budgeting is the act of developing a plan that stipulates how you – and possibly other members of your family – are going to spend your income. While there are many ways to budget, the overall goal of the process is to save more and spend less. This is done by prioritizing spending and tracking where money is going on a daily, weekly, or monthly basis.
Budgeting is beneficial for many reasons. It can help you:
- Discern necessities from nonessential expenditures.
- Prioritize spending and saving.
- Save for retirement or a large purchase.
- Stay out of debt by highlighting bad spending habits.
- Establish an emergency fund.
- Gain peace of mind with monthly forecasts of your financial situation.
10 Tips for Creating a Sensible Budget
- Start now. Whether you have just started your first job or currently live off of retirement savings, it is never too late to begin budgeting. The sooner you start, the more you’re likely to save.
- Work with your partner or other family members. Significant others and children need to participate in the budgeting process to help it be successful. If you live alone, consider having one of your friends serve as an accountability partner.
- Record everything for one week. You may uncover some bad habits that you didn’t even know existed, and the insight into your spending patterns can help you outline a practical monthly plan.
- Set reasonable goals. Be patient; you don’t have to change your life overnight. It’s good to set attainable, short-term goals – like saving for a vacation or paying off credit card debt.
- Be realistic; you don’t have to track everything. You don’t need to document every penny or Certain expenditures, like gasoline, are likely out of your control. If tracking every transaction seems overwhelming, start by recording ones in the categories in which you typically overspend (e.g., entertainment, dining out, or clothes shopping).
- Save first, then spend. Pay your “future self” before your current self. This means paying off debt, setting aside money for retirement, and creating an emergency fund before you spend money on nonessential items.
- Keep in mind that every month will be different. Christmas spending may hurt your wallet more than Halloween – or vice versa! Just remember that if you need to make some cuts one month, they don’t have to become permanent. January and February often have low expenses as people tend to stay home during the coldest months.
- Use a credit card. It may sound counter-intuitive, but credit cards can make tracking expenditures very easy. You can also receive benefits, like cash back or airline miles, if you use a rewards card. If credit cards are too tempting for you, though, stick to cash.
- Remember semi-annual expenses. Personal property taxes, car insurance, and other significant expenses may only come around twice a year, but they can single-handedly ruin your budget. One way to help keep them in check is to set a little bit of money aside for them each month.
- Utilize some type of budgeting tool. If you want to use cash, you may want to develop a system involving envelopes to help you stay organized. If you are using a credit or debit card, an online tool, like Quicken, can help you budget a year in advance.
If you need help crafting your 2018 budget, contact Partnership Wealth Management today. We can guide you through the entire process and assist your efforts with expert support and advice.
We would love to help you find financial security in the new year. Are you ready to have a budget-friendly 2018?
The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. This information is not intended to be a substitute for individualized tax, legal, or investment advice. We suggest that you discuss your particular situation with a qualified tax, legal, or financial advisor.
As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them make the most of their investments. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started: www.partnershipwm.com.