If there's one New Year's resolution that will help you the most in the long run, it's making a vow to manage your budget. I have seen my adult kids struggle with this one which I thought it wise to add it to my list! Outline a budget that works for you — and make a plan for how you'll stick to it. Apps like Mint and You Need a Budget (YNAB) can help you do this as painlessly as possible.
The key to making your budget according to Mirium Caldwell of "the balance" is to evaluate it and adjust it as necessary. Evaluating your budget is a key step to making sure your budget meets your current financial goals. Your needs and goals will change over time, and so you should evaluate your budget on a periodic basis. Ideally, you should review your budget on a monthly basis and adjust any categories that are consistently lower or higher than you had budgeted, but at least every year you should sit down and totally assess your budget and your financial goals.
This process does not need to take as long as setting up your initial budget.
List Your Current Financial Goals
Ask yourself what your current financial goals are. These do change over time. For example, you may have been focusing on getting out of debt, and once you reach that goal, you may have a lot of extra money to redistribute. If you are getting married, your financial picture will change drastically. Having a child will also change dramatically. Choose at least three specific goals to work towards. Most experts agree you should save about fifteen percent of your income towards retirement. A good goal would be working towards contributing this much.
Make Sure Your Budget Is Helping You Reach Your Goals
You should evaluate your current budget to see if it is helping you to reach those financial goals. This may be fairly straightforward, but if something has recently changed, then you will need to change your budget, as well. When you find yourself debt-free you may have several hundred extra dollars each month. It is important to make saving a top priority, although you may be able to increase your spending in different categories.
Find Areas When You Can Improve
Look for ways that you can improve your budget. You may find that you need to put your savings in a different bank so that it is more difficult to access the money. This may add extra incentives to track your spending throughout the month. Consider switching to an envelope system if the one thing you hate about budgeting is tracking your expenses. This means identifying your budget weaknesses and making changes in your strategies so that you do not have them as problems anymore. If eating out is a problem find ways to make eating at home easier.
If you spend too much on video games look for ways to limit your spending.
Check Your Budget Each Month
Finally, assess your new budget again at the end of the month. This will help you to make sure that it is working well for you and that the changes are actually working. You may need to tweak a few categories, but it shouldn’t take that long to complete the process. Regularly evaluating your budget is the key to being successful at budgeting. It is what you can do to change the situation and take control of your finances. Since your income and expenses can change from month to month, you will need to constantly adjust and make changes.
It can be beneficial to look at your annual budget too. This lets you look at larger spending patterns to see where your money really is going. This can help you make changes and prioritize your spending so you can reach your financial goals.
Taking the time to evaluate your budget when you set your new goals or create a financial plan can help you stay on track. If you are married, you should do this as a couple every few months.
If you are having a difficult time sticking to your budget. Make sure you have a few planned splurges as a part of your budget. This can make sticking to your budget easier. You can also make sure you are cutting out the things that really are not necessary. Look at the things that you enjoy the most and prioritize them, and cut out the ones that bring you the least amount of satisfaction. It can take time to figure this out, but it will help you make your budget work.