Tips for Setting Up the Perfect Budget
A new year means that it’s time to start setting up the perfect budget.
The last few weeks of 2015 is drawing to an end, as the sounds of jingle bells fill the streets. Before you know it, a fresh new year will here, bringing with it exciting new opportunities and experiences. One of the first steps to achieving the most out of your 2016 is putting together a realistic budget that will ensure financial security.
Successful budgets that promote healthy spending require dedication and discipline. Financial fitness has never been achieved with a January resolution that’s abandoned by February.
Let’s look at 5 powerful tips for setting up the perfect budget as you plan for your future.
1. Understand why you are budgeting
A successful budget should be seen as financial “training wheels”, aiding you to naturally and effectively spend less than you earn. Financial struggles have the tendency to spiral out of control quite quickly if you don’t keep an eye on things, which is why an up-to-date budget is so important.
Having the ability to compare how much you have spent, or need to still spend, with the amount that you have coming in, enables you to keep track of your finances. Being able to break your expenses down into “needs” and “wants” also plays a key role in allowing you to figure out what expenses you can cut, if necessary.
2. Have a long term goal in mind
For some it may be saving for a house or car, for others it may be debt freedom or the ability to make a career change. Regardless of what your goal is, having a specific, concrete long term goal in mind will help you remain dedicated.
When it comes to financial planning, it is rather inevitable that you will have to cut some amount of entertainment spending. Having an end goal in mind that will change your life considerably, helps lessen the sting of smaller sacrifices.
3. Set short term goals along the way
While long term goals are great for dedication, it’s still quite easy to convince yourself that one little “slip-up” won’t really hurt your big goal. Smaller goals, like treating yourself to a fancy dinner if you stay within your weekly budget, can help make the day-to-day struggles less stressful.
4.Know how much you actually make
In order for your budget to be as realistic as possible, it is important to have a clear image of how much money you actually have coming in each month. This isn’t just your annual salary divided by 12, but rather your true take-home pay per month.
5. Support is significant
When attempting to make any sort of significant change in your life, having decent support always makes the process smoother. Here you can look to a spouse, parent or even a close friend to help keep you on track. A healthy support group that promotes similar behaviours will build dedication and discipline.
Discussing your budget and spending habits with your family will also help raise money-wise children, allowing them to fully understand the value of money and healthy spending from an early age.