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Budget Planning for the New Year

Posted by Kristin Perissinotto on Dec 4, 2018 5:28:00 PM
Kristin Perissinotto
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December can be a busy time of year, and it's likely that budgeting is the last thing you want to think about, but this is the perfect time to start planning for 2019. 'Save more money' is one of the most popular New Year's goals around, so if that's your aim this year, it's time to prepare your budget.

new year goal resolutions

1. Set your goal

What is your main financial goal for the year? Do you want to save a specific dollar amount? Would you like to start investing? Do you want to make a downpayment on a property, or do some renovations? Decide on a reasonable figure that you would like to see in your account, and the date you wish to reach it.

2. Work backwards

Now you have set your goal and timeframe, some simple calculations will tell you how much you need to put away each week in order to reach your goal. It is easiest to put away savings around the same time you get paid, whether that be weekly, fortnightly, or monthly. Ideally, you will set up an automatic transfer into your savings account as soon as possible. Why not do it right now?

calculate budget

3. Calculate expenses

Get all your expenses down on paper. It's best to be as thorough and accurate as possible, so you have a realistic idea of how much is outgoing each week. This will require an element of guessing, but looking back through your costs from the year will provide you with a good idea of how much you spend weekly.

4. Calculate income

Your income may be as simple as putting down your weekly salary, or it may be a little more complex. If you have income coming from multiple places, or if it's inconsistent, take an average number to work with. And be sure to take into account income from all places. This might be a side job, an eBay store, investment dividends, or something else entirely.

do the maths budget

5. Do the maths

Can you realistically reach your savings goal? If yes, congratulations! If it doesn't seem likely, it's time to reevaluate. Can you increase your income by taking on a side job? Can you cut expenses by changing some habits, or switching internet providers? Look over your expenses critically, and make some cuts if you can. This is where you need to decide what is going to be important to you in the New Year. Do you want to reach that savings goal? Or do you want those bi-weekly restaurant dinners?

6. Commit!

Perhaps the hardest part, the final step is to commit to your budget. Be realistic and reevaluate your plans in a couple of months if you are finding the plan isn't working out as you had imagined. And if it doesn't, it's not the end of the world! Reset and make the changes you require. Life can be unpredictable, so your budget has to be flexible.

Happy New Year, and happy saving!

Tags: Gifts & Holidays, Personal Finance Basics, Everyday Expenses

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