If you’re like a lot of people, you’re probably looking to make a few changes in the new year. While the most popular resolution is to lose a few pounds, creating a better financial future is usually a close second.
Of course, the easiest way to make any sort of change in that area is to start out with a budget. There are ways you can create a budget to ensure you’re successful and the changes you make actually stick.
Here are a few tips to help you start out budgeting well into the coming year.
1. Take Stock of Your Financial Situation
Before you can really make lasting change with your finances, you need to take stock of how you spend and save. Sit down and see what bills you have each month, where you’re spending extra money, and the sum of your total debts.
Write everything down and get a clear picture of the money coming in each month versus what’s going out. This will give you a good idea of where you need to budget. Then you can free up some of your money for paying down debt.
2. Cancel Subscriptions You Don’t Really Use
Have you ever added a subscription to your debit card and forgotten about it over time? Or what about those free trials that you forgot to cancel until the bill showed up? If you can relate, then it is important to start your budgeting journey. You can do that by canceling recurring charges for services you don’t really use.
This will help free up space within your budget and give you more room for other expenditures. And if you decide you have to keep the service in the future, you can always restart it at that time. Being more mindful of the services you use will help you save. It will also make you more aware of what you really want to spend your money on.
3. Decide Between Needs and Wants
If you’re interested in improving your financial situation in the new year, it’s a good idea to decide between needs and wants. For example, you might need new tires for your car, but you want that morning latte at the coffee shop.
After looking at your spending, determine if you should give up some luxuries. Perhaps you can trade them in for things that would make your life easier or safer. Sometimes just getting rid of those little expenditures provides enough extra income to allocate to more important needs.
4. Determine If Your Current Income is Sufficient
It is important to review your current financial situation to determine if your current income is sufficient. If not, it might be time to make a few tough choices or opt to get a second job.
The good news? There are opportunities for side gigs that allow you to fill in the gaps of your income without having a traditional job. You can drive for Uber or Lyft, be a shopper for Instacart, or even rent out your home on Airbnb.
5. Keep Your Budget Easily Accessible
Once you’ve determined how you need to budget your money, keep your budget easily accessible. Maybe this means having a copy on your cell phone or printing out a small version to keep in your wallet.
Next time you need to make a purchase that’s not on your list of monthly planned expenses, you can refer back to your budget. Then determine if it really does fit into your bigger financial goals. While this won’t always be helpful, it is certainly a good habit to start.
6. Remain Committed to Sticking With Your Budget
When it comes to making any resolution for the new year work out, self-control is usually most people’s downfall. It can be incredibly hard to exchange old habits for better ones. However, remaining committed is key.
When you feel tempted to spend money in a way that doesn’t align with your goals, stop yourself. Envision what it would feel like to pay off all your debt so you can achieve the goals you’ve set for yourself.
7. Don’t Be Afraid to Adjust Your Budget Through the Year
The great part about making a budget is that it can be adjusted as necessary throughout the year. Maybe you’ve gotten a better job or secured a promotion that allows you to pay down your credit card debt faster.
Or you could find yourself in a situation where your living expenses are higher, meaning you’ll need to focus less on extra purchases. Either way, remember that you have the control to make changes where necessary while sticking to your original plan.
8. Rely Less on Credit Cards and More on Savings
Finally, it is important to remember to rely less on credit cards and more on savings in the new year. It is still a good idea to have some accounts to build your credit profile. But relying on them is a surefire way to spend more in interest than you really need to.
Instead, keep balances as low as possible and tuck any extra away you have into a savings account. By doing this, you’re making it easier to budget for those everyday expenses or in situations where unexpected costs creep up.
Conclusion: Better Budgeting in 2022
Is sticking to a budget part of your goals for the coming year? If so, these eight tips are a great place to start in changing your financial situation in 2022 for the better.
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