The New Year is supposed to be all about fresh beginnings, but by late January, we often find ourselves tired of self-control... and the guilt associated with falling off the resolution wagon --especially when it comes to our finances.
But it doesn't have to be this way.
If you have a good budget in place, you won't have to worry about being bad about money (or beat yourself up about failing), because all you have to do is follow your budget plan.
Since things change every year -- particularly when you have a family! -- it's important to revisit your budget now to ensure that it fits your life for the year to come.
1. Take Stock of Where You Are
You can do this the old-fashioned way: Go through your receipts, look at the budget that you've outlined for yourself and then compare it against your actual spending.
To see just how you're trending, take notes on these points, in particular:
- Whether you're over or under budget. Maybe you spend more on that daily morning coffee than you care to admit. Or you assume that you'll spend a ton on groceries, but you actually aren't using the whole amount each week, leaving some resources that could be better allocated for other family needs.
- Any spending that's changed -- and that will continue to change as your kids get older. For example, perhaps you're no longer shelling out for diapers, but you now have to contend with paying for preschool. Similarly, maybe you buy clothes less frequently because your teen has hit her final height and shoe size, but now you face pressure to give her money to spend with friends.
- Any new expenses that you need to save up for, such as braces or a month at summer camp.
- Progress (or lack thereof) toward your larger financial goals, including retirement and saving for college. Make sure to note your successes over the past year -- as well as ways that you'd like to improve.
2. Compare Yourself to the 50/20/30 Rule
LearnVest follows the 50/20/30 Rule, which says that 50% of your budget should go toward essential expenses, 20% should be allocated for financial priorities and 30% should go to your lifestyle choices.
Compare your current budget to the 50/20/30 breakdown to see how you fare. To do this, you can spend quality time with a calculator or use our budgeting tool to automatically compare your budget against the 50/20/30 recommendations. It's important to note how much you need to increase or decrease each section of your budget to get in line with 50/20/30.
3. Align Your Budget for the New Year
This is both an art and a science. Start with the science by looking at any new expenses that you'll face, so you can adjust your budget accordingly. The goal is to increase or decrease each item on your current budget to bring it in line with your spending needs for the coming year.
Now for the art part. Play around with your budget to make those increases or decreases a reality. Are your essential expenses coming in over 50% of your budget? Maybe you can make a resolution to use less electricity in the new year to lower your bill. Are your lifestyle expenses over budget? Maybe you can go to a restaurant one fewer time per month.
And don't forget that income is part of the equation, too -- if you make more money, you'll have more wiggle room all around. This could mean anything from picking up an occasional extra shift at work to earning extra cash by running errands, like this mom. Another thing not to gloss over: Be sure to include your financial priorities in your budget. These are all of the changes that you'd like to see in the new year, such as increasing your 401(k) contribution or opening a 529 for your child.
4. Stay on Track
There are two components to making sure that you're doing right by your 2013 budget: tracking your progress and motivating yourself.
To track your progress, log in to the Money Center at least once a month. As for motivation, it can take many different forms. One way is to indulge in a little reward at the end of the month if you've stayed within your budget -- like brightening your home with flowers. You can even get the whole family involved by treating everyone with a pizza night for staying on budget. There's an added perk to this line of thinking: Getting your kids in on the act teaches them good financial habits and gives them their own reason not to badger you to buy more stuff.
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Need help managing your money? LearnVest's free Money Center will help you create a budget. Our free bootcamps will help you take control of your money, cut your costs or get out of debt. And our premium financial plans -- managed by LearnVest Certified Financial Planners -- can help you chart a course for the future you want.