If you’re like most people, your list of new year resolutions probably included “get finances in order.”. But do you have a concrete plan of attack? Money doesn’t save itself, you know. But you don’t have to be like the 41.6% of people whose resolutions don’t make it into February — follow these budgeting tips to keep your finances fruitful.
Make — And Keep To — A Budget
It’s hard to keep promises you’ve made to yourself about spending if you don’t have a budget. So time to bust open the books. Your first step should be calculating your monthly income. Once you’ve done that, add up the non-negotiables: your monthly bills and necessary expenses, like food and household supplies. Take a look at your bank statement to see how much you typically spend on entertainment and eating out. Is it more than you thought? Decide on a number close to the the usual, and designate that amount your “free money.” Then subtract all of those expenses from your income. Plan to save the rest. If your savings look a little paltry, recalculate your expenses including your goal savings amount as a non-negotiable, and use the leftover cash as your “free” money.
Separate Your Accounts
A shocking 34% of Americans — roughly 66 million — don’t have a single dollar saved up for emergency expenses. And another 35% have less than $1,000 stowed away. Much like opening an IRA, opening a savings account allows you to set money aside, dedicated to a specific purpose, and remove it from your usable funds. If you don’t have it, you can’t spend it. Plus, money in a savings account does typically accrue interest. (Granted, it’s at a rate of about 1%.) Are you saving up for a car, or a vacation? Create several savings accounts for your several unique goals.
Harness the Power of Apps
Your phone doesn’t have to just be a drain on your finances — it can help you organize them. Google Calendar can organize your bill due-dates and autopay dates, so you always know when your bank balance will be taking a hit. There are also several budgeting apps, like You Need A Budget or GoodBudget. These apps present visuals and automatically categorize your expenses to take much of the work out of budgeting. (Fair warning: They also require you to connect your bank account to them to fully track the comings and goings of your funds.)
Auto-Transfer Money to Savings
If it’s hard for you to throw cash into a savings account, don’t make yourself do it — make your bank do it instead. After you’ve gotten your budget into a predictable rhythm — keeping in mind which bills come out of which paycheck, and how much is left over — choose a date you know you’ll have surplus money in your account, and set up an automatic transfer to your savings account. You’ll be pleasantly surprised when you check your savings account balance in a few months’ time.
Don’t Beat Yourself Up
As John Lennon once sang, “Life’s what happens when you’re making other plans.” Sometimes your car needs repairs, or you have to fly home unexpectedly, or you get blindsided by an unexpected dinner invitation, and keeping a strict budget isn’t in the cards. Whose life is so regular that unexpected expenses never occur? If you don’t always hit your monthly savings estimate, try not to be too hard on yourself. And don’t try to “catch up” in one month. Instead, just get back on the wagon, keep saving, and try to pay off any credit card debt in a reasonable amount of time, given your monthly expenses.