If you’ve been making the same resolution for years, this is the year that you need to see it through. We’ve complied a simple and realistic guide with the budgeting tips you need to accomplish your goals this year.
Here are steps you and your wallet need to start your 2023 off right.
Create your Budget and Stick to It
This might seem obvious, but you would be surprised to know how few Americans are currently using a budget. According to Credit Donkey, only 32% of American households operate a monthly budget.
When it comes down to it- that’s not enough. Budgeting does take some effort, but it’s worth it. This year, we’re going to go beyond the loose money agreements we make in our heads and actually create a comprehensive budget plan. Your budget can exist on paper or on a mobile spreadsheet, but it must be written out.
Here’s now to start your month-to-month budget.
Budget Basics
Once you’ve written out your monthly earnings, start by listing all of your needs and how much the cost. Include regular expenses like rent, utilities, insurance, car payments, groceries, internet, and any minimum debt payments.
Then write out your want-based monthly expenses. This can include things like a gym membership and other subscriptions that you use in your everyday life.
After you have factored the set expenses into your budget, it’s time to pay yourself. Paying yourself is essential to make your bug financial goals happen. Make monthly savings goals, investing goals, and retirement contributions. It’s best to automate your savings directly into your paycheck so you can grow your wealth in the background.
Then budget out the rest of your cash into shopping funds, going out funds, and short-term savings goals. Update this every month according to what is coming up in your calendar. Are you attending a wedding soon? Prepping for a big holiday? Anticipate these irregular expenses here so you aren’t caught off guard and forced to overspend on your budget.
Creating an appropriate budget for “fun money” is extremely important when it comes to crafting a realistic budget. You can’t deprive yourself of things you love in order to make your financial goals happen. That’s not what frugality is about and being too strict with yourself can seriously backfire.
Giving yourself some necessary wiggle room will make you more inclined to stick to the plan, so create a spending cap for fun things like takeout, shopping, and day trips!
In you budget, every dollar of income should have a job, whether that’s paying a bill or taking you out to dinner. Budget to zero every month to make sure that all of your income is accounted for and serving you.
Assess and Edit your Spending
Take a hard look at how you’ve been spending your money. Go through credit bills and bank statements and see what went right and what wen wrong.
Recognize any bad habits and make changes wherever necessary. This could mean deleting food delivery apps from your phone, taking public transit instead of driving, or switching to a more affordable phone carrier.
Whatever you have to do to live within your means, do it.
Learn when to Automate Your Bills
Automating your expenses can be a helpful tool to ensure that the necessities are taken care of, but payment automation isn’t always the answer. Try to stay away from automated subscription payments that aren’t necessary to your well-being. These can stack up pretty quickly and eat away at your budget without you even realizing it.
Think Beyond your Traditional Savings Account
Saving your cash is extremely important no matter where you are in your financial journey, but there could come a point where stuffing your cash into a traditional savings account can be counterintuitive.
Traditional savings accounts don’t offer many benefits, and you cash will not grow very much in there. Once you have saved six months to a year’s worth of your expenses, consider contributing to a savings account that will increase your wealth more quickly.
Elevate your savings in 203 with a high yield savings account, Roth IRA, or investments.
Match your Spending to Savings
Need an extra incentive to boost your savings? Try to match your spending to your savings. Make the commitment to put whatever you spend in your savings every month to give your savings a jumpstart in 2023.
Create SMART Savings Goals
Loose plans and sloppy financial goals will only hurt your motivation in the long run. Whenever you make a financial goal, make sure it’s a SMART goal.
Spart goals are:
- Specific
- Measurable
- Attainable
- Realistic
- Time-bound
Give yourself the chance to succeed by creating goals that are designed to help you achieve what you set out to. Here’s an example of a SMART goal.
By September 2023, I will pay off 75% of my remaining student loan debt by reducing my grocery budget.
Check your Progress
Stay up to date with your budget and financial goals by regularly checking in. We recommend that you examine your spending at the end of every week to make sure you are sticking to the budget plan. At the end of every check in, make adjustments to your plan wherever necessary.
Things to Remember
2023 is the year to start living by the budget. Here is what you need to remember to keep yourself on track.
- Budget to zero, but don’t deprive yourself
- Be vigilant about checking your spending and updating your budget
- Create SMART goals and see them through