With the new year comes new opportunity to get physically fit, spend more time with loved ones and become financially stable with a well-planned budget. Unfortunately, we can’t do much to help with the first two, but to get you and your budget ready for 2016, we’ve outlined five tips to consider for a prosperous and prepared new year.
Evaluate & Reduce Debt
Before planning your budget for 2016, take a close look at your debt. As daunting as this sounds, it’s important you lay out all the expenses you need to pay off. For the New Year, decide what debt you can realistically tackle without overextending you financially. Once you begin to pay them, choose debts that have the highest interest rate and pay more on those than required each month.
Setting savings aside for yourself, long term, is very important. Decide on how much money you’d like to save for retirement, kids’ college funds, etc. for the year and then break that amount up into feasible monthly payments, which you can commit to making. Set up automated payments to make it easier and to better ensure you stay consistent.
Record Income & Spending
Writing down exactly what it is you are making and spending is imperative to planning your budget. Though admitting your daily spending habits can be difficult, it will ultimately be beneficial for your budget and eye opening to see where exactly your money is going and exactly how much you are spending.
Cut Down (Unnecessary) Expenses
Need that ESPN magazine subscription or daily macchiato? I don’t think so! Take time to sit down with your bills to examine the lavish expenditures you can do without. Eliminating things like magazine subscriptions, gym memberships, certain utilities and any other unnecessary expenses can do wonders for your wallet — and free up space in your budget for more important things.
Since budgeting can require some guesswork, you’ll need to remain flexible in planning it. Your budget will guide you through spending decisions through the year but be ready to veer off the path a bit at any given time due to unexpected expenses. Things such as holiday purchases, car repairs, and injuries can all throw your budget for a loop. Expect the unexpected!