And just like that, the new year is here. Do you make an annual commitment to transforming your finances but have yet to make progress on your goals? If this sounds like you, it may be time to implement some new strategies.
To really make progress, you need to master your budget. A budget is the foundation of your overall financial picture. To get started, check out these seven tips to help make managing your budget easier in the new year.
1. Get to Know Your Money Management Style
Does the thought of updating an Excel spreadsheet make you nauseated? Or does spreading out your receipts on your kitchen table make you giddy? Take a moment to reflect on whether you prefer digging into details or a more casual approach to money management. While it’s great to try new things, success in budgeting is often determined by playing to your strengths.
If you love details, consider a zero-balance budget where every dollar is assigned. If you like more flexibility, use the 50/30/20 approach where your income is broken down into categories. Spend up to the assigned amount for essentials, fun, and financial goals, respectively, and you’re on target.
2. Streamline Your Processes
Reduce the need to touch your budget by using automation to your advantage. Update your online bill pay to submit your core obligations on your behalf. For bills that allow you to use a card, save your debit card information into their secure payment portal. This approach gives you the advantage of a secure transaction while avoiding the temptation of a credit card.
When it’s time to export your budget, your transactions will show up with your checking account’s debits and credits. You’ll reduce the need to log in to multiple accounts, making your job easier than ever.
3. Prioritize Spending on What Matters to You
There’s nothing that says you have to spend money on an impeccable wardrobe. And there’s nothing that says you can’t order takeout more often than not. Budgeting is all about identifying your priorities. Think about what spending brings you joy, covers your needs, and helps you live your life.
If ordering takeout buys you time with your kids, it may be worthwhile to allot for it in your budget. Once you’ve determined what’s most important, give yourself permission to budget for what matters to you.
4. Get Comfortable Talking About Money
Talking about money often incites a wince from those who are uncomfortable with the topic. But it doesn’t have to be that way. Forget social norms and elevate conversations about money with your friends and family. Financial problems are often driven by stigma around money or perceived pressure to spend like your peers.
Be honest about your financial situation when an opportunity to spend comes up and it’s not in your budget. Chances are, your transparency will be refreshing to others in the same position. This also holds true for spending opportunities that don’t align with your interests or goals. When you protect your spending power, you can stay on track with your budget.
5. Identify Your Weak Spots
Is a trip to Target a financial drain? Or is your weakness artisan soaps at the farmers market? No matter your weak spots, get comfortable identifying them. With a better view of where your money seems to escape you, you can work to better control it.
When you enter a situation where you may overspend, prepare yourself. Set a budget for what you’re willing to spend beforehand. You’ll allow yourself to enjoy spending on things you enjoy while protecting your bank account.
6. Use Apps to Support Your Spending Habits
The smartphone has almost replaced the computer for budgeting, so it’s smart to use it to your advantage. Download financial management, savings, and store apps to help you manage your money.
For example, the Target app allows you to shop for in-store pickup while adding money-saving coupons. Reviewing your cart and your total can allow you to pause and review before you buy. Keep your trip to a pick-up situation, and you can avoid in-store temptation. You can also use a rebate app like Ibotta, which rewards you for in-store, online, and pick-up shopping on select retailers. This app sends you cash rebates for buying select items which you can stack with store coupons.
7. Treat Saving and Investing Like an Invoice, Not an Option
Taking care of your obligations is fantastic, but don’t forget your obligation to your future self. Eventually, you’ll want to retire. You don’t want to greet retirement with an empty bank account. Instead, treat savings toward retirement and other goals as another bill. Start saving even just a small amount to build good habits.
Set up an automatic transfer to your savings account on the day you get paid. Likewise, consider pre-tax deductions to your employer’s defined contribution plan, especially if they offer a match. Consistent saving paired with the stock market’s average 8% return will have you in a great position in your golden years.
New Year’s is Just the Beginning
Often a time of self-reflection and renewal, the motivation of a new year is just the beginning of your budget improvement dreams. With these tips in your resource bank, you’ll be able to make significant progress in improving your financial habits. By the end of the year, you’ll be more strategic and intentional with your spending and saving. With your financial upgrade complete, you’ll have to get creative with next year’s resolution.