Top 10 Budgeting Tips for the New Year

If you’re like most people, there are two items that repeatedly pop up on your list of New Year’s resolutions: lose weight and save money.  While everybody knows that diet and exercise are the key to losing those extra holidays pounds, few adults have a clear idea of how to go about setting a budget and ramping up their savings.  It’s no surprise considering how many people have trouble balancing a checkbook.  So if you’re looking towards the new year without enough scratch in your bank account to buy a bag of peanuts (much less support you for three months if you lose your job), then perhaps it’s time to take a crash course in budgeting.  Here are a few tips to get you started.

1.  Get help.  If you’ve never used a budget, chances are you haven’t the faintest idea how to formulate one.  Seek the help of a financial advisor to set you up with something that works for you.

2.   Write it out.  There is a common phrase that amounts to “something written is something remembered”.  Try writing out all of your expenses for the month (including estimated entertainment spending and yearly payments like property tax and insurance broken out into monthly increments).  Until you know what you’re spending, you’re going to have a hard time controlling it.

3.  Cut credit.  This is not a metaphor.  You should physically cut up your credit cards (all but the one with the lowest interest rate, and this should be kept in a lock-box for emergencies).  If you don’t have access to credit, you can’t spend more than you earn.

4.   Share information.  One of the major problems for couples or families on a budget is that one hand doesn’t know what the other hand is doing.  If you’re not sharing information, you’re likely seeing problems every month.

5.  Online banking.  Sign up for online banking as an easier way to have visibility of your accounts.  Make a habit of checking in daily to stay on top of your budget and avoid overdrafts.

6.  Track purchases.  Many people spend without realizing how much they’re wasting on unnecessary purchases.  Keep all of your receipts in a pile (even when you pay cash) and then total them up at the end of the month.  The horrifying figure may just prompt you to keep better track of your spending.

7.  Get cash.  Try a little experiment.  Withdraw an entire month’s worth of pay in cash (or money orders) and use it to pay for everything (bills, groceries, gas, etc.).  Separate it into envelopes to cover each area, including savings, and see if you can stop yourself from dipping into the savings portion.

8.  Consolidate.  If you find that you’re spending more than you earn each month, consolidate your debt into one low-interest loan so that you can lower monthly payments and spend less in the long run.  Just don’t use it as an excuse to rack up more credit card debt.

9.  Prepare for April 15th.  You probably lose a lot of money each year that could counteract your tax debt simply because you aren’t keeping track of possible write-offs.  How much you save could be just as important as how much you spend.

10. Make savings a monthly bill.  If you view your savings account as a bill that must be paid monthly like all the others, you’ll have less trouble socking some money away.  The easiest method to accomplish this is to add a monthly automatic withdrawal from your checking to your savings account.  Like direct pay of bills, you won’t even have to think about it.

Emma Martin writes for Coin Collecting where you can find information on vintage and rare coins and chat with other members via the online forum.

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