As we go into a new year, it is always good to look at your personal finances and plan for the year ahead.
It may seem like a big job, especially as we are only getting into the swing of things after Christmas, but the benefits are huge. A new year is a new opportunity to learn from the previous year and plan to do things better than before - that's why making a budget is key.
Here are some reasons why new year budget plans are important and how to do it easily:
Look at your current position.
This may not be too good after the Christmas period, but it needs to be done to decide on the best course of action. If you have overspent, take time to look over things and figure out how to balance everything in the next few weeks so you are back to normal.
Pay off the debts (or as much as you can) and start being more mindful of your spending. This is important so you don’t ignore your financial position as often people can bury their heads in the sand and this doesn’t solve the problem.
Look at a monthly budget plan.
Each month may be simple to figure out the expenses and plan for months where you must exceed your budget due to family occasions or school expenses.
You can do this on your computer or on a notepad, noting all the things required including mortgage/rent, heating, electricity, food, health, insurance, TV and everything else you pay for.
Then there are the unexpected expenses like the holiday, wedding or confirmation. Write down the money you’ll need for these events to get a good idea of where you need to save and how you’ll meet these important commitments.
Cut out silly spending.
When you are planning your budget, look at your spending habits right now. Do you buy too many coffees? Are the hot chocolate trips for the kids important or could you make it at home and save? How can you offset some of the big expenses during the year with better budgeting? Cut out takeaways to see the extra money build up which could be used for special occasions.
Commit to your goals.
Be held accountable by downloading a spending app or by noting what you spend and looking at it every week. Where did you overspend, and should you have done so? Other tips could be asking your partner or a friend to follow up with you about your saving habits and how to budget.
You and your partner could agree to stop coffee trips or spending silly money on toys for the kids on the weekend to make up for your busy life.
Look at free family events instead and keep to a strict budget - except for when you have special occasions and places to be.
Keep tracking it and learn from it.
You may be surprised by what you learn while you are working on your budgeting. This will only benefit you and you’ll get better at budgeting and saving more money. This could be done by throwing a few quid into a jar or by opening a savings account. Everyone needs a budget and it makes everything you spend money on transparent.
Will you be making a New Year's budget?