Assess your spending patterns
You may or may not have created a budget for this year, but regardless of what you wrote down on paper or typed into a spreadsheet, your spending actions speak louder than your best intentions. To truly do better next year, you need an accurate picture of where this year’s money went.
Determining this may turn into a project, especially if you made a lot of cash purchases and haven’t been recording them. If you used a credit card for your spending, you can go through your statements and add up the totals you spent in each budget category. With cash, you’ll have to rely on receipts or your best guessing.
Either way, list out your budget items, then calculate the total amount of money you spent in that category. For example, add up the dollar amounts from every supermarket trip, along with the time you picked up milk at the convenience store or ordered protein bars online, to find out how much you actually spent on groceries in a given month. Ideally, you’ll have this data for every month of the year, and you can use that to find an accurate estimate.
Even if you don’t know where every penny went, you can still learn from this project. Maybe you didn’t think you went to the theater that often, but you’re spending at least $25 a month on movie tickets. How much are you spending on gifts, new clothing, day trips, or electronics? Having a concrete idea of this year’s spending will prepare you to plan better for next year.
Reality-check your resolutions
Now that you’ve looked at your spending patterns, you can create or edit your budget accordingly. Some items—like your cable bill or car payment—should be budgeted based on their fixed amount. For flexible spending categories, use your habits to reality-check your goals. It sounds great to say you’ll cut your budget for eating out in half, but picture what that will mean: When everyone in the office heads out for Friday lunch, you might need to say no and enjoy your sandwich instead.
Set financial goals that are big, but not impossible. You might not be able to put 50% of your income in savings, but maybe you can bump your savings from 5% to 10% of your paycheck. Do some math to make sure that the amounts you want to save plus your budget aren’t totaling more than your anticipated income. A goal to save $1,000 a month is great, but if it isn’t realistic for you, you’ll just end up frustrated. Instead, you could aim to save $500 a month and feel accomplished, especially if you can put more than that away sometimes. The best resolutions for the next year are ones that will stretch and challenge you—but that are also fully attainable with some effort and self-discipline.
Automate whenever possible
To make that task of self-discipline in budgeting easier, consider automating your savings. Utilizing direct deposit from your employer is a great first step, followed by putting recurring bills on auto-pay. Using auto-pay wherever it’s available will save you time as well as the stress and added burden of late or missed payments.
To build your savings with minimal effort, set up automatic savings plans, too. You probably won’t miss the money as much if it moves directly from your paycheck to a separate account. Simple makes it easy to set savings goals and add funds to them. You can add goals at any time or increase the target amount as your savings grow. And when you let technology do the work of getting your income where you want it, you can spend more time enjoying the fruits of your labor.
If you want to be sure to stick to your financial plan, tell someone about it. Knowing that others are watching—whether it’s your spouse or your social media followers—might be just the inspiration you need to change your habits for good. And if you start slipping from your savvy savings routine as the year moves along, an accountability partner can help you get back on track. Find someone you trust to look over your budget, and if you’re really brave, you can even ask them to help you stick to it.
If you share finances with a partner, you can map out your budget together and (hopefully!) agree on how to keep each other accountable. Maybe you’ll each get a limited amount of cash each week to spend, or maybe you can agree to change one of your usual evenings out to a frugal date at home. Sharing your plans and motivation can help you through the challenging times so that you really can do better next year.
And there WILL be challenging times, whether it’s an unexpected bill or a new must-have item that tempts you to drain your bank account. When you start to slip off the savings wagon, a little motivation will go a long way. Take some time now to think about WHY you are saving. Do you want to buy your next car with cash? Are you saving for a down payment on a country home with a big yard? Will having six months of expenses in savings relieve your stress when work is unsteady? Knowing why you are saving will help you to keep that big picture in perspective.
To keep yourself motivated, put visual reminders of your goals where you will see them often. Make a photo of your ideal vacation destination the background on your phone. Hang a sketch of your dream house on the fridge. Or keep a card in your wallet with some words of inspiration from your wise, goal-crushing self to the you who wields the debit card. At the end of the day—and year—you can’t expect to hit your goals until you’re totally committed to making those dreams a reality.
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