New year, new you\u2014new budget? As a time of reflection, renewal, and goal setting, the new year is a perfect opportunity to start a budget for the first time\u2014or to take a look at your budget with fresh eyes.<\/p>\n\n\n\n
Consider what\u2019s worked, what\u2019s changed, and how to make a budget with your annual plan and goals in mind.<\/p>\n\n\n\n
Some people are spurred to start a personal budget when they run into financial trouble or decide they\u2019re not saving enough money. However, they may lose motivation once they\u2019re in the clear or if they feel the budget is too constraining.<\/p>\n\n\n\n
It may be easier to stay motivated if you start by identifying your goals and values and then build a budget that aligns with and furthers these deeper ambitions. New Year\u2019s resolutions can be a good place to start.<\/p>\n\n\n\n
A good budget will help you uncover where and when you\u2019re spending money\u2014and it isn\u2019t necessarily about limiting yourself.<\/p>\n\n\n\n
For example, you may find that you\u2019re spending more money than you expected on dining out (a common finding for new budgeters). Rather than simply stating that you want to eat out less to save money, take the opportunity to build on your goals in your budget.<\/p>\n\n\n\n
If you want to expand your business<\/a>, you could eat out less and invest the savings from home cooked meals into your company. In doing so, you\u2019re reframing the decision from an act of limitation to taking action toward achieving your goal.<\/p>\n\n\n\n Once you have your goals listed, it\u2019s time to create<\/a> (or update) your budget.<\/p>\n\n\n\n Budget notebooks or spreadsheets work, but many people prefer to use budgeting software<\/a>. Software is easier and quicker, allowing you to link your financial accounts and then import and categorize your transactions.<\/p>\n\n\n\n Software also does the calculations for you, helping you understand how much you\u2019ve spent in different categories and how much you have left to spend each month. And the best software options<\/a> can also create custom reports and offer a companion mobile app you can use to track and update your budget while on the go.<\/p>\n\n\n\n Start by determining your net income (how much money you receive after tax withholdings and paying for benefits), so you know how much you\u2019ll have to work with each month.<\/p>\n\n\n\n If you own your own business, work on commission, or receive irregular freelance or contract pay, budgeting software can help you keep track of your financial flow and average your monthly earnings.<\/p>\n\n\n\n Next, create categories for your budget to track where your money goes each month. At a minimum, you\u2019ll want categories for your monthly bills, necessary expenses, discretionary expenses, and savings. And from there, you can create subcategories.<\/p>\n\n\n\nFollow These Steps to Build a Budget<\/h2>\n\n\n\n
Choose a System<\/h3>\n\n\n\n
Figure Out Your Monthly Income<\/h3>\n\n\n\n
Choose Relevant Budget Categories<\/h3>\n\n\n\n