Lose weight. Save money. Quit smoking. Pay off debt. 2010 brings new resolutions, and most of us could benefit from setting some financial goals for the year ahead. The beginning of the new year is the perfect time to evaluate your financial situation and set up a budget to help you save time and money in 2010 and beyond.
A good starting point when establishing a budget is to put together a budget worksheet. There are many premade budget worksheets available for free online, or you can make one yourself. An easy way to begin is to write down your income in one column — be sure to include all money you receive from all sources — and then write your expenses in another column. Don’t forget to include both fixed expenses, like your mortgage or auto loan payments, and variable expenses like the cost of groceries and entertainment.
Once you’ve written down your income and expenses, compare the two columns and see where you stand. Don’t get too stressed if you find that your income is less than your expenses! This is workable and is likely the reason you’re creating a budget in the first place.
You probably know where most of your money is going, but you might be surprised by how much the little things add up. Tracking all of your expenses is an important step if you are serious about finding ways to make the most of your money. Start taking note of all the money you spend each day on meals, snacks, gas, impulse purchases, etc. Use a small notebook, a PDA, or anything else that works for you, and be sure you note every little thing you purchase. After you have done this for a few days, you will start noticing how the small things really add up and where you can start cutting back.
After you’ve tracked your expenses for a week or so, you’ll start finding more and more ways in which you can cut down on your spending. Be honest with yourself about what you want versus what you actually need, and start concentrating on spending money only on your needs. Set goals for yourself and establish rewards that you’ll receive when you reach your goals. Stop spending money around the plans you make, and begin making plans around the money you have left after all your responsibilities are met. Seek out free or less expensive alternatives for at least a few of your areas of expense, and keep track of how your savings add up.
Once you’ve found ways to spend a little less, it’s time to put that extra money to work for you. Although it might not seem possible at first, try to set aside at least a portion of this extra money into a dividend- or interest-bearing savings account. Look into secure savings options like Certificates and Individual Retirement Accounts (IRAs) that are insured by the NCUA or FDIC. Contact your financial institution to see if they offer savings options with low minimum balance requirements so you can start setting aside money right away.
Be sure to ask about the terms and conditions of any savings account you consider. Does the account allow additional deposits? If so, how many deposits are allowed per year? Are your funds insured? How often can you withdraw money from the savings account, and is there a penalty for doing so? There are many savings account options out there, so you’re sure to find an option that will help you reach your savings goals.
Don’t give up!
You may not get your budget right the first time. Creating a budget that works for you takes time and practice in order to master the basics. It’s best not to overwhelm yourself by setting too many or unrealistic financial goals. Start small with a few simple and clear budgeting objectives for 2010, and know that these are resolutions you can keep. Be sure to take advantage of the multitude of free and inexpensive budgeting resources available online, consider setting up an appointment with a financial advisor to review your goals, or contact your financial institution for additional budgeting tips and tricks.