Start the New Year with a New Budget

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Ever feel like you don’t have complete control of your finances? You’re not alone.

According to a recent Gallup Poll, only 32 percent of Americans have a household budget that tracks income and expenses. While some people think “budget” is a dirty word, it’s a great way to track spending, get out of debt and save for future goals.

Follow the money

Budgets don’t have to be elaborate – just accurate. You can take advantage of electronic programs such as Excel or Quicken®, or simply use a paper and pen. The key is to find what works for you, stick to it and be accurate.

• Record all income including salary, alimony, investments, etc. Don’t plan on tax refunds or year-end bonuses since they aren’t guaranteed.
• List fixed monthly expenses such as loan payments and minimum credit card installments. For expenses that aren’t monthly, such as auto or home insurance, take the annual premium and divide by 12 for a monthly amount.
• Record all variable expenses– anything you get a monthly bill for where the amount can change (utilities, for example).
• Now comes the hard part. Write down everything else you spend money on – lunch, groceries, gas, bus fares, coffee at work, etc.
• If you’ve identified goals such as a vacation, paying off loans early or retirement, include them as budgeted items. After all, reaching your financial goals is the whole point of budgeting.

At the end of the month, add everything up. If you’ve got more income than expenses, great! You can apply the extra to your saving goals. If expenses exceed income, your listing will show areas where you can probably reduce spending. (Example: Maybe you can bring a lunch to work instead of going out.)

As you reach one goal, you’ll have extra money that can be applied to achieving other goals faster. For example, if you’ve paid off a credit card, you can apply the money you were spending to retirement savings.

Reaching your financial goals is all about identifying opportunities and resources already at your fingertips. With careful planning – and a commitment to your plans – your financial goals can be well within your reach.