New Year. New Budget

New Year. New Budget

Another new year has arrived. As always, this is a time for reflection and a time to look ahead. Most important, though, itís a time to create and commit to a personal budget that will lead you to a future of financial freedom.

Published Monday, January 20, 2014

Another new year has arrived. As always, this is a time for reflection and a time to look ahead. Most important, though, it’s a time to create and commit to a personal budget that will lead you to a future of financial freedom. If you already have an established budget, this is the ideal time to reassess your spending and saving habits. Make sure you are still on track to achieve your financial goals. If you’ve never held yourself accountable to a budget, start today. It’s not easy, and it does require commitment and sacrifices. You’ll have to take a good, hard look at how much money you have, how you’re spending it and how you’ll need to change your habits in order to reach your short and long-term goals. But once you adjust to tracking your spending and saving, and start working towards those goals, you’ll be that much closer to a sound financial future.

Before you actually create a monthly budget, you’ll want to take some time to determine what your short and long-term financial goals are. For example, you may want to get all of your credit card debt paid off. Or you may want to focus on saving for college or retirement, or both. Prioritize your goals in order of importance to you but remember to be prepared for changes that may arise due to unforeseen circumstances. You may have to make adjustments from time to time so be flexible, but stay committed.

Once your financial goals are set, you’re ready to create a monthly budget. While there are many different formats you can use to set up a budget, you may want to consider a software package designed specifically for this purpose. They make the process of budgeting so much easier by automatically tracking your expenses and charting them into specific categories so you can easily see where your money goes. Some of the most popular budget software on the market includes Quicken, AceMoney and YNAB.

After a couple months of actual tracking, you should have a more realistic picture of where your money is going each month. This is the time to look closely and implement changes where necessary. For example, if you’re regularly spending more than you’re making, then you’ve got to cut back on your spending. This won’t be easy but it is absolutely necessary. Cutting out trivial expenses such as those expensive daily lattes, paying someone else to do chores around the house and yard, and paying full price instead of shopping during sales will make a big difference. Reducing larger expenses including luxury vehicles, season tickets and other extras are a must, too. You may also want to think about refinancing your current mortgage if you can get a new loan with a lower rate. A few reductions in spending will give you more money to work with each month to get to your goal. It won’t take long for you to get in the habit of living according to your budget. While it may be painful at first, the adjustments you make in the short-term will pay off tremendously in time. And the sooner you get started, the quicker you’ll be enjoying a life of financial freedom.

 

 

 

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