Hello New Year: Budgeting like it matters
We often start every new year with good intentions. Whether it's fitness, family, or spending, we've made some targeted goals so we can take control of the year before it takes control of us.
But after seven hours staring at an Excel sheet on January 2nd, we're not sure how to compartmentalize our income and expenses so we often give up before we've really started.
Our eyes are tender, and our gusto is gone. But it's too soon to give up! Before you give up on being wise with your budget, let's walk through a couple things together.
First, you can't just budget to budget, you need to set very specific goals. We can all agree that we've wanted to do better with our finances but let me ask you this: why? Are you swamped with debt? Is it tough living within your means? Has your income changed? Are you hoping to get into the real estate market, or make those major home rents without cringing at the bills?
Go ahead and write out your goals. Beyond that, I want you to write out somewhere that you can see all the time: I want to save! Regardless of who you are, or where you're at with your budget, there should always be cash savings you continuously grow.
When it comes to debt, there is always good and bad debt.
Though opinions on debt varies, generally good debt can be described as something that is making you money in the long run, but that you can comfortably afford in the present.
Bad debt includes things that depreciate in value, like a car loan. In fact, car loans are so loathsome, you're welcome to call me for a twenty-minute rant on the subject.
Regardless of your current situation, an expense is an expense and your earnings will continue to feel lesser when your expenses remain high. Here are a few quick suggestions for starting a budget to allow for cash savings.
Begin to pay the minimum amount on low interest expenses, saving the extra for your high interest expenses. Setting this as a priority will help to balance your expenses equally based on the interest you're paying.
However possible, set aside $100 a month for savings. Put it in a place you don't have access to, or have your bank put restrictions on your accessibility to that cash.
Review every three months. I know this sounds simple, but if I were to ask you March 31st if you've revisited your budget, I bet I would see more than a few shaking heads. Make a date with your calendar now, with a reminder set on your phone. Take yourself and your laptop out for a nice coffee, and a good review. A lot can change in three months, and your expenses are no exception.
Overcomplicating your measures of tracking income and expenses can become tiresome. If it becomes to difficult to keep up with whatever you create, you're bound to leave it, and possibly your goals, in the dust. When you create your plan, keep it simple.
I'm positive then and only then will you look back at 2018 and be surprised at how far you will have come.