The start of a new year means everyone is making New Year’s resolutions. One great idea is to get your financial life in order so that you can start off 2020 right.
In this post, we will be showing you the best budgeting tips for the new year so you can keep yourself on budget and save more money in 2020.
The costs of housing, health care, and education consume larger shares of household budgets and have risen faster than incomes, according to the New York Times. People need to budget their money carefully more now than ever.
What will I learn?
The benefits of using a budget
Using a budget is like trying to eat healthy; why would you want to do it?
Well, there are a lot of positive effects using a budget can have. One major benefit is the sense of peace you can get from finally having your finances under control!
Another great thing is that you will be able to track and limit your expenses, so you can watch your savings tick on up. As an added bonus, as you make your monthly budget it will get easier to do, like a workout for your brain!
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Budgeting Tips to Help You Keep on Track
The following are tips you can use when making a budget you want to stick to for 2020. You don’t have to follow every piece of advice here. Even just picking a handful of tips you like can help you live a more fulfilling financial lifestyle.
1. A simple way to start a budget
It can be overwhelming to get your whole financial life in order. If it helps, try to section off everything you need into smaller digestible parts.
The average budget is usually sectioned off into four parts:
- Your income
- Your expenses
- Your net income
- Your savings goals
Read this post for tips on how to create a budget that works.
2. Collect your data
Before you start a budget, there are some things you should have readily available to look at.
For income, you need to collect a lot of information about yourself, such as:
- your paychecks
- Invoices from clients
- Blogging and social media income
- Freelance income
- Survey payouts
- Refund apps
- Stocks sold
- Any other sources you get money from
For your expenses, you need to know your monthly bills, rent, subscription services, and any debt payments you have to make.
Other expenses might be:
- Hair appointments
- Gym memberships
- Eating out
- Social events
- Child care
- Gas for car
- Lawn care
To get your net income, add the total of your income together. Then, add up the total of your expenses. Subtract those from each other.
It should look something like this:
- (total income) – (total expenses) = net income
This is whatever money you have leftover that can go toward the final section of your budget.
Your savings goals can be whatever you want them to be. Some suggestions I have are:
- To pay off your student loan debt
- To put money in your retirement 401k
- To save toward a new car or home, if needed
- To save for a 5,000 emergency fund account
3. Keep it simple
This doesn’t have to be a work of art or a literary masterpiece. Even using something like an excel sheet can help you make a budget without getting distracted.
4. Don’t forget the extra costs
Sometimes people forget to add in expenses that don’t occur every month. This can end up leaving you feeling surprised when you suddenly have a payment you didn’t expect.
Make sure you plan for things like:
- Oil changes
- New tires
- Quarterly insurance payments
- Household maintenance
- Gifts for holidays or birthdays
- Cleaning supplies
5. Leave yourself notes
Let’s say an unexpected cost occurs that you didn’t plan for. If you know that it’s going to happen again in a few months or the next year, leave a note on your phone for yourself.
Then, at the end of the month go through your notes and make sure you adjust your budget for whatever you need. This will save you a lot of pain in the long run.
6. Seasonal adjustments
Before every season starts, sit down and think about what you know you’ll need due to the weather changes. Winter clothes? House adjustments? Auto care before the cold hits? Plan a time in your budget where you prepare for these changes.
7. Figure out the best format for you
Some people like printable budgets. Others like excel spreadsheets. Some don’t want to work on a computer and prefer an old fashioned notebook. Many young people prefer doing it all on their phones!
Test the waters and figure out how you want to approach budgeting.
If you are interested in printable budgets, check out a Pinterest board like this one. Just remember, if you are new to budgeting you’ll want to start off with something simple.
9. Formatting a budget
When adding stuff to your list, you want to make sure you have all the info you need for each item. I suggest you start with a format like this for expenses:
(Item name), (due date) — (amount cost)
This tells you everything you need to know and helps you remember due dates. No more late fees!
Set your fixed bills to be on auto-pay so that you don’t get any late fees.
11. Order of importance
When you are deciding which bills to pay, consider when they are due and how important they are.
For instance, you’re going to want to pay for electricity bills before any subscription services. Rent should come before any of your extras too.
12. Don’t ignore what you can’t pay
Let’s say you can’t afford a bill. It’s okay. It happens to everyone. Just don’t ignore it. Call the company you owe too and make an arrangement for when you can pay for it.
If you show you are willing to pay when you can, the company will be more likely to work with you and less likely to turn your debt over to a collection agency.
13. Create a filing system
File your receipts. Keep all your paperwork on medical bills, charitable donations, and so on. Keep track of what you paid for your bills every month.
You want to make sure you have an in-depth record of exactly how your money is being spent so when tax season comes, you’ll be ready.
14. Remember to have fun!
Doing adult things like living on a budget is hard. It can often feel as if there’s no allowance for relaxation.
It’s important to remember that you can still have parties, spend time with your family, and basically do anything you did before. It’s just a matter of planning and finding ways to save while you do all of that.
It’s also might help to rank your upcoming events in order of how much you want to do them, so you can cut back as needed.
15. Eyes on the prize
It’s important to keep your goals at the front of your mind. There will always be times when you see something that you want, but that you don’t really need.
This even extends to things that are on sale, but that you won’t end up using. Saving money is good, but unnecessary purchases can be a drain on the wallet.
16. Check-in weekly with your partner
This applies to people budgeting with someone. Budgeting shouldn’t just be for one person in the family. In order for it to be successful, you all have to be on the same page.
Every week, sit down together and check how well you did. See if there are places the budget needs to be changed. Trust me, it actually feels a lot better when you are working together as a team anyway.
17. Budget if you plan on having kids
The average cost of raising a child estimates to roughly $233,610, according to the U.S. Department of Agriculture. If you are planning on kids, you might want to take a careful look at that number.
Remember that budgeting doesn’t just stop you from spending. It can help you save money too, especially for long-term future goals. If you want to prevent yourself from spending two hundred thousand dollars, you’re going to need a budget and plan financially for a child.
18. Need vs Don’t Need
This is especially important when you are evaluating your monthly bills. Do you need a subscription to Netflix, Hulu, AND Shutter? Do you even have time to watch all of those movies in the first place?
Cut down on expenses you don’t need. You don’t need to eat out three times a week. Your life doesn’t depend on having a dozen subscription services.
Before you freak out, this doesn’t mean eliminate all the things you love. Just narrow down the list to the things you really love and actually use.
19. Stick to it
It goes without saying that not sticking to your budget isn’t the way to go. Making a budget and then not following it is like buying a cake mix and not looking at the recipe: you’re going to end up with a mess on your hands.
20. The 52-week money saving challenge
It’s important to have some money set aside for emergencies. Getting caught in the rain with a sudden medical emergency, automotive damage, or an unexpected bill can be a gut-sinking feeling.
In just 52 weeks, you can save up $4100 to set aside for such an event. This extreme ‘challenge’ can help you get the distance ahead that you need to prepare for the future.
To learn more, click here.
21. The 26 Paycheck Savings Challenge
This challenge is a simple and easy way to build up your savings with a twist: you start by setting aside $10 from your first paycheck and increase it from there.
Over the course of four weeks, you’ll ramp up your savings until you’re reserving $110 every paycheck, then hold there.
Up to the task? Find out more by clicking here.
22. Zero Based Budgeting
One of the most effective means of making a budget is zero-based budgeting. The goal of it is to make your income exactly equal to your expenses, so the difference between the two is zero.
Basically, it means that every dollar that comes in is accounted for and goes somewhere, so it can’t be wasted. This counts money put into savings, investments, et cetera. This way you never end up with money floating around in a drawer or a wallet, waiting to be spent on things you don’t need.
23. Budgeting Apps
Since we live in the modern, digital age, it’s helpful to know that there are many apps out there that can help with the sometimes difficult task of making a budget.
They can help you keep track of your bills’ due dates, track your expenses, and create budget plans based on your financial situation. Many even allow you to change the currency used if you plan on going outside the United States.
If you want to learn more about budgeting apps, check out our article here.
24. 5 Year Plan
A sound monthly budget is all well and good, but if all it does is get you to the next month, what good is it? That’s where the five-year plan comes in.
A five-year plan allows you to figure out where you want to be once that half-decade is finished.
It can include paying off debts, saving for retirement, switching jobs, or anything else you could feasibly do.
Click here to read more about the plan.
25. Credit cards aren’t emergency funds
Lately, people have been skipping the idea of having an emergency fund, thinking they can just use a credit card when the time comes.
Here’s why that’s a bad idea…
What if you get into a situation where no one in your family can work? Just one bad car accident can keep you from working due to bad injuries.
If you put all the medical and auto costs on your credit card, you aren’t going to have any income to pay off the monthly payments. Compound interest will make the debt even worse as time goes on.
It’s much better to save for emergencies instead. Don’t give yourself debt when you’re already going to be struggling!
26. Be prepared for anything
Unexpected problems can occur. Emergencies, unfortunately, just happen. A situation may come up where you need money as soon as possible. You want to make sure you have a fund put away that you only touch when you absolutely need it.
Think about it this way, an emergency fund is basically an insurance policy you are putting together for yourself. You want to be prepared for whatever may happen so that, if the time ever comes, you won’t need to be stressed about money on top of everything else.
27. Make some extra cash
When you live on a budget, every penny counts. To make your life a little easier, financially, spend 10-15 minutes a day using various apps and websites to earn a little extra cash.
Here are a few posts with big lists of money making sites and apps to get you started.
- Free apps to make free money with
- Over 500 trusted sites to make extra money
- Use your car to make money
They are all free to use and can easily earn you a little extra cash. This also makes saving money on a budget much easier and realistic, especially for those of us living on a low income.
Changing your financial habits isn’t going to be easy, but you can do it if you make a good plan. Budgeting in 2020 is a fantastic New Year resolution and I strongly encourage you to keep at it!
If you have any tips that you’d like to share, feel free too in the comments below. We and our readers would love to hear them! Also, consider checking out many of our other money-saving articles to give you more inspiration for financial changes.