With the changing of the seasons comes the time to look at certain aspects of your life. For example, when the warmth of summer transitions to the cold of winter it is a good idea to have your furnace tuned up to ensure it is ready to keep your house warm. With each new year, it is also a good idea to check in on your budget. Maybe your expenses have changed, or your income has gone up; or perhaps you have paid down some debts recently. Whatever the reason, a new year requires some new budget tips to keep your financial future on the right path.
Set a Goal for Your Budget
The US Federal Trade Commission recommends using your budget to set a plan and achieve a goal. The goal you set is not as important as having a goal in the first place. You might be saving for a big purchase, such as a new home, or preparing for a more distant expense like sending your children off to college. Your budget is the best tool you will have in setting and meeting a financial goal. More importantly, budgeting with a goal in mind gives you more reason to focus on the budget you have set for yourself and adhere to it in the short and long term.
Understand Where Your Money Goes
Another benefit of a budget is the ability to gain insight into how your money is spent. Sure, you pay your mortgage or rent each month and put money toward your credit card bill, but do you really understand where all of your money is going? For example, how much is dining out costing you? What about entertainment such as TV subscriptions in the home or going out to the movies with friends. When you set a budget it is important to learn the financial lessons it is showing you.
A budget can help you balance your income against the various outflows of cash to meet your expenses. You should separate those expenses into necessities such as rent/mortgage, groceries, and utilities, and the non-essentials such as entertainment, dining out, and travel.
Keep Track of Your Budget
There is no point in creating a budget if you are not going to look at it and track your income and expenses. While it is a good idea, in general, to regularly check in with your budget and track changes, there is no better time than the start of a new year to investigate your financial standing through your budget. If you are afraid to look at your budget because you might not like what you see, that is not going to change the reality. The best way to take control of your finances and secure a better financial future is to be vigilant in tracking your budget. Find out how you spend your money, where you spend your money, and identify ways to save more money by simply checking in more regularly.
Using a budget is a great way to stabilize your finances. Make sure you are not one of the 41% of Americans who do not use a budget. Use the New Year to take the first steps toward a better future.
Make 2019 your years to save. For more tips and budget tricks contact Manhattan Ridge today.
The views expressed are not necessarily the opinion of Social Advisors, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.