A new year represents new beginnings. Therefore, it’s pointless to focus on the mistakes made with budgeting in past years. Use these clues as guidance toward a solid 2018 budget and expect to make progress toward fulfilling the goal.
Set Realistic Goals
What is the reason for family budgeting? It’s pointless to make a budget without a purpose. Good reasons for budgeting are saving money for emergency repairs, saving money for retirement, saving money for large purchases, and paying off Twin Lakes Lending debt. The realistic part comes from understanding that reaching goals isn’t an overnight process. However, sticking to the goal for the whole year will generate progress.
Review 2017’s Budget
Planning a family budget for 2018 begins by looking back. View the information objectively. It should show budget-conscious families’ situations where sticking to the budget was beneficial and situations where families blew the budget. Learn from these successes and setbacks, and vow to be more successful with fewer setbacks in 2018. Additionally, analyze the monthly budget for each month. Did that month underwhelm or exceed expectations? A thorough analysis of each month’s 2017 budget will make it easier to create 2018’s budget.
Create 2018’s Budget
Through expenses and income is how 2018’s budget will come to fruition, so start with unavoidable expenses. Those mandatory expenses are what most homeowners and renters pay monthly. Examples are utilities, rent, mortgage, insurance, gas, and groceries. Gather the monthly average for each expense. Add all expenses. The result is a rough estimate of the monthly expenses. Now, determine income by reviewing last year’s tax returns and dividing the answer by 12.
Adjust both monthly expenses and monthly income by adding optional and upcoming expenses and income. Examples of optional expenses include recreational activities, entertainment venues, shopping, cable, and streaming subscriptions. Upcoming expense and income relates to pre-planned trips, events, and appointments coming up in the year. Examples include company raises, income taxes, hospital visits, postponed home repairs, weddings, business trips, family vacations, birthdays, and anniversaries. Finalize the budget. When in doubt, underestimate instead of overestimating.
To ensure families don’t go over budget, practice being frugal. Frugal isn’t ‘cheap’ or ‘stingy’ but ‘creative.’ Purchase only mandatory items.
- Shop with sales, deals, discounts, markdowns, and clearance in mind
- Browse dollar stores, secondhand stores, consignment shops, flea markets, and yard sales for great finds.
- Reduce water and energy use.
- Change cell phone plans.
- Eat at home.
- Arrange a staycation.
- Take children to the library
- Play board games
- Have a movie night with a DVD rental.
With endless ideas for budget-conscience families, saving money is a breeze.
Allow Room for Flexibility
A common mistake relates to believing this year will be like last year. An unyielding budget is not good. Unpredictability separates one year from the next, and it’s impossible to predict the financial future in unpredictable circumstances. Specifically, the budget chosen may require adjusting due to unseen expenses, unnecessary spending, or a sudden surge in income. The best solution to an unpredictable year is to remain open to change. Accommodate to the change by reducing, eliminating, or adding expenses or income to the monthly budget. After all, small amounts add up, and reaching the goal is more important than tossing out the budget altogether.
In closing, invest in a family budget while the year is still fresh. Embrace 2017 high points and carry it over to 2018 as the foundation. Remain frugal and flexible throughout the year, and record the details on paper, a spreadsheet, budgeting software, or MS Word. The achievements made by sticking to the budget are astonishing.