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Refresh your budget for the new year

Refresh your budget for the new year

January 16, 2023

Following a budget is one of the essential steps to securing your financial future. Coming out of the holidays always creates an opportunity to review your budget and refocus. Not only that, inflation has skyrocketed to levels not seen in 40 years, the market has been unpredictable, and there is potential for a recession.

Having a budget that considers the impact of the current economic landscape on your finances and accurately reflects your current financial situation is the best way to help you plan for the future. With the year turning, it’s a good time to refresh your budget. Think of it like an annual physical — an excellent way to check in with where you are and where you want to be. Here are some quick tips for revisiting your budget so you can make the most of your hard-earned money:

Step 1: Recalculate your total income. You need to have an accurate picture of how much you’re earning to properly allocate your cash to expenses, debt, and savings.

Step 2:Track all ongoing expenses. Including housing, transportation, utilities, health care, and insurance. Make sure to track the little things like subscriptions, gym memberships, and gas costs.

Step 3: Identify contributions to savings. A good rule of thumb is to save 20% of your income for savings, investing, and debt repayment.

Step 4: Assess your spending habits. After considering your expenses and savings requirements, are you spending within your budgeted parameters? Do you need to rein in your spending? Tracking your spending habits helps you not spend more than you planned.

Step 5: Review your total debt. Debt terms may have changed, and it might make sense to consolidate your loans or change your repayment plan, so you’re paying off your debt in the most efficient way possible.

Attached is a budgeting worksheet to help you walk through the above steps.

Budget Worksheet

Setting yourself a weekly budget is ideal, but if that feels like too much to manage, a monthly budget is an option too. The longer the time period, the more room for stepping outside your budget. If your budget includes others, it’s helpful to put it together so everyone is on the same page. You’re more likely to have budgeting success if you act in unison and have the same goals in mind.

We’re always here to help you identify opportunities to make your money go further. If you need help walking through how to best budget, setting annual financial goals, or paying off debt, please reach out, and we can schedule a time to talk.