The best way to save money is to form a budget. If your new year’s resolution is to sock away some cash, constructing a budget for the year is a good place to start.
A budget helps you visualize the money that’s coming in and out of your everyday life and plan ahead to reduce the chances of financial trouble. Below are five tips for budgeting for the new year that will keep you on track with your finances.
List your income and expenses
On a piece of paper or the computer, make two columns. On the left side, write down all of your expenses for the year. This includes your rent or mortgage, all of your bills, child care, car payments, student loans, and money for things like gas and groceries.
On the right side, list all of your estimated income for the year from any jobs, assistance, or other ways of receiving money.
Add up the total for both columns. If the number on the right side is larger than the one on the left, congratulations — you’re living within your means. If the number on the left is bigger, you’ve got some work to do.
You won’t be able to list out all of your incomes and expenses right down to the last dollar. Some of your expenses, like electricity bills or gas, will fluctuate from one month to the next. And the same can be true for your income.
When writing down your expenses, overestimate the amount. Use a number that represents the most you can expect to spend. And when writing down your income, underestimate the amount with a number that represents the least you could expect. Doing it this way builds a safety net into your budget and helps you prepare for a worst-case scenario.
See where you can save
Once you can see all of your expenses in front of you, it becomes easier to identify opportunities to trim back. Perhaps you can downgrade your cable, internet, or cell phone plan. You can try shopping for groceries at a less expensive store or make different arrangements for commuting or child care services.
Anything that you can reduce from your expenses essentially gets added to your income, so trim wherever you can.
Set some goals
Your budget should have some goals attached to it, which will help keep you focused and on the right path. Your goals can include things like getting out of debt, paying off your credit card, or saving up for a house or car. You’ll likely stick to your budget better when there is a goal in sight.
Have a backup plan
Every budget should have a backup plan in case things don’t go as planned. A backup plan can include renting out a room in your house for extra income, selling off something you don’t really need, taking out a payday loan, a car title loan, or borrowing money in some other fashion.
Need a Boost For Your Budget?
If you need to add something to your income column, a loan from Cash Fast Loan Center can get you kickstarted for the new year. Contact us or visit one of our many locations today to take the first step in reaching your financial goals for the new year.