Set up a budget to help you get started!
January typically means fresh resolutions and goals for the New Year. Whether it’s weight loss, a new hobby, changing careers, or simply saving more money, writing it down can mean the difference between achieving your goals and not achieving your goals. In fact, experts agree that by establishing a plan and writing down your goals, you’re more likely to achieve them. If you’re like many of us, saving money and establishing a long-term savings plan may be at the top of your to-do list. According to a NerdWallet survey (2018), over 84% of Americans make financial resolutions for the New Year but, sadly, over 50% who made them in 2018 failed to achieve their monetary goals. We want to help you stick to them, so let’s get started.
The first part of any financial plan must start by telling your money where to go. If you simply deposit it, forget it, and spend it, then you’ll likely be left wondering at the end of the month where it all went. This means, you must make a budget and, yes, stick to it.
You’ve probably heard about a variety of budgeting methods available. The budget we’d like to discuss to help get you started is a zero-based budget. This means, you simply account for every dollar of your money each month, down to the very last penny.
- Gather all of your information, including bills, receipts, and banking statements.
- Make a list of all of your income sources. Don’t forget to include any side income, freelance work, overtime pay, child support, or any additional revenue you may receive each month.
- Itemize all of your bills, including any housing/rent payments, utilities/water, insurance, auto payment(s), loan or credit card, and gas/transportation. Don’t forget to plan for maintenance/repairs, taxes, birthdays, seasonal expenses, or any unexpected emergencies.
- Subtract your expenses from your income. Hopefully, you’ll find there are portions of money left in which you can allocate toward savings, loan payoff, increased retirement distribution, and more. The idea is that you’ll be telling your money where to go so it works for you!
- Feel free to use an old-fashioned piece of paper and a pen or research free or low cost online budgeting tools that are available. You can start by creating categories to segment your expenses. Consider adding a rainy-day segment, allowing you to put money aside should something unexpected occur.
- Start tracking your daily expenses and don’t leave anything undocumented. Yes, that even includes your daily latte or cup of Joe. Remember, you’ll want to account for every dollar, taking your budget down to zero.
Keep an eye on your budget, adjusting as needed. Don’t worry as it may take a few months to get into the habit. You’ll probably find surprises along the way about how much you’re spending in certain categories. This is a great opportunity to access expenses and find creative ways to pare down spending. Those funds can then be re-directed toward short and long-term savings goals. Feel free to reach out to a knowledge First Bank representative to discuss all of our high-yield savings options that best suit your needs.
Let’s achieve our financial resolutions!