Budgeting for a New Year

It’s hard to believe the new year is already here. The beginning of the new year is always a great time to do a budget check up, to make sure your budget is still working for you. It’s also a great time to adjust for any new changes that might be coming in this new year.

Time to Re-evaluate the Budget

It’s time to take a good look at how you did with your budgeting throughout the year last year. Did you do really well with sticking to your spending and saving plans? Or was your plan too restrictive or too open? Now is a the time to evaluate and make changes.

If your plan was too restrictive, making it hard to stick to, try to allocate funds from one area to another to make it easier to stick to your budget. If you just don’t have the extra money to loosen up any categories, then try to plan little spending splurges throughout the year, to make it easier to tolerate the restriction. A little-planned spending for fun here and there, it can really renew your resolve to stick to the budget.

If you budget plan was way too open, it might be time to plan out your categories for spending a little more. Having a larger category is great, but it also can make it harder to see where your money is going. For instance, if you have a spending budget that includes everyday household items, gifts, entertainment and splurge money, it might be too easy to splurge with the money and not have enough for gifts you want to give or household items you need.

By setting up a little more restrictive categories, it can help you to see where your money is really going and where changes might need to be made.

Use Cash instead of Credit or Debit Cards

I know swiping a card and being done is really convenient at the store, but that can lead to overspending. There is just something about handing over hard cold cash that makes you realized, hey! I’m spending money here. There can be a spending to brain disconnect when using credit or debit cards.

If you do really well at staying on budget with your credit or debit cards, good for you! But if you tend to go over budget when using them you might consider a cash envelope system. It really has made a big difference in our own household spending over the years.

It takes a little time to adjust to the new cash system but once you do, I think you will find it’s easy to stick to. Plus there is no way to go over budget with a cash envelope system. Once the cash is gone, you have to quit spending.

Balance the Books

Each new year, I always check to see what our income to spending is. I redo our budget each month, but a yearly check up can be helpful to see the big picture. Checking will help to make sure we are putting away enough for each category of spending and saving. This is something I really watch with bills that can vary greatly like the electric or heating bills.

To determine the average I need to put away each month, I take the last 12 month of bills and add the totals. Then divide by 12. This gives me the amount I need to put away each month to have enough for our bills. Don’t forget to include bills that only come every other month or every three months.

With bills that vary, like the heat or electric, it might be good to save up a little extra. I did that for the first year we got serious about our budgeting. Now we have a surplus in each category that varies, so I only have to put away the average amount for each month.

If you are starting at a zero balance you might have to put a little extra away for the first few months to make sure you have enough. This is really true if you are starting your budget system when the heating or electric bills are at their highest.

Evaluate your Budget Each Month

This year my husband made less than last year, and we had a $200+ increase in our medical insurance. Since I re-evaluate our budget each month, I was able to adjust some of the other categories to accommodate the changes. By staying on top of the changes, we ensured we didn’t run too low in any one category for our spending or saving.

Once you have your budget set for this year, be sure to evaluate it each month. Little or big changes can happen over the year but when you check up on your budget each month, you can plan for them and not get caught short on money by the end of the month.

If you have never set up a budget before check out the how to set up a budget series at the top of the budget helps page. I also have a budgeting template in my store if you’re looking to track your money in a spreadsheet.

It’s your Turn

Do you budget? If so, how often do you evaluate your budget to make sure it’s working for your family? If you don’t budget, why not? I would love to hear what you have to share. Scroll down and leave me a comment below.

More Budgeting Post You’ll Enjoy,

Tip for Being a Happy Non-Consumer
What do Dirty Dishes Have to do with Debt
10 Simple Ways to Save Everyday
One Simple Change to Save Money

I’m resharing this I updated this post from last year to help you get your year off to a good start. I’m working on seeing how we did on our budget and where we need to make adjustments for this year. I hope this article helps you to make a doable budget for this new year.