6 Budgeting Tips for the New Year

BY Jeffrey January 4, 2021

The new year is always full of things we have to look forward to, like new ideas, new friends, new experiences, and new memories. And, as is typically the fashion, it’s a great time to hit reset on any goals we aimed for but didn’t quite hit the previous year.

While New Year’s resolutions often come with a side of skepticism, that doesn’t mean we shouldn’t put effort into what we’d like to accomplish during the next 12 months. Among those accomplishments may very well be starting (or maintaining) a thorough and effective budget. As you make plans for the upcoming weeks, months, and year, consider these tips when putting together your new budget.

Start with Smaller Goals

If you’re new to budgeting, you may have your sights set on lofty goals. These are excellent rewards and should always be the focus of why you’re budgeting in the first place. However, there are also many smaller but just as important steps you need to follow in order to hit those larger goals.

Consider beginning with smaller, more attainable goals. Something like, “Save $X by the end of the month” is a great starting point and can quickly evolve into “Save $X every month.” Another smart idea is to set a monthly spending limit. This helps you get an idea what you spend your money on and how often.

Whatever you choose to set as your very first goals, try to make them simple. This works both to reinforce your confidence in budgeting, as well as builds a foundation for larger and more challenging goals. 

Monitor Bills and Recurring Payments

This one may see kind of redundant. Why would you need to keep track of automatic payments if they’re…automatic? Isn’t that the point? Well, yes. But this can also create potential issues in future budgeting. 

There certainly is a peace of mind that comes with knowing you won’t forget a payment. But if we’re not paying attention to how much and how often these payments are made, it can be difficult to calculate how much discretionary income we have at any given point. Keeping track of these payments provides a very detailed look at how much money goes into our accounts, and how much goes out.

Track Everything

That’s right. Everything. This might be one of the hardest parts of starting a new budget, but it’s also one of the most important. You can’t maintain a successful budget if you don’t know where your money is going. That soda you picked up on the way to work? Write it down. Movie with friends? Save the receipt. 

Every purchase makes an impact on your budget, and even (most importantly) the little things add up. Tracking all of your income will teach you as much about yourself as it will about budgeting. You’ll learn where you spend too much and where you might need to spend more. Even better, tracking all your purchases will give you a fuller sense of control over what happens with your money.

Use an App 

We’re throwing this one in because some of us are just awful at budgeting. No shame in that! It’s not really fun for most people. We get that. For all of you that struggle with budgeting, why not try an app? 

There are plenty of options for both mobile use and computers. Just punch your numbers into the program and all that math and accounting and super boring stuff gets taken care of for you. If you’re more of a mobile fan, some apps even scan your receipts, save the info, and process your spending habits. Technology really is great, especially for those of us that struggle with everything budgeting.

Quit Comparing Yourself to Others

Just quit it. Right now, at the start. It’s a terrible habit to get into and does absolutely nothing for you or your budget. Your budget is yours, and it’s never going to be “theirs,” neither will theirs ever be yours. Which is fine! The only thing you ever should compare your budget to is your budget from last month.

Which leads us to, 

Don’t Be Afraid to Fail

Because you will. Surprise! It happens. And you know? It’s ok. When you “fail” at budgeting, it’s not some catastrophic, irreversible pitfall. We probably shouldn’t say it’s an essential step of budgeting (that’d look bad), but in order to become more effective at budgeting, you’ll need to see what went wrong the month before. 

Maybe it was being late on a payment. Not putting enough in the Treat Yourself Fund. And where on earth did $300 go on the 17^th? If we’re being honest, you can’t really fail a budget unless you just quit. That’s the great thing about budgets. The more you keep at them, the better you get. 

So stick to it! Before long you’ll get the hang of how to budget like a pro.