The ball drops. The lights flash. The fireworks explode. “Auld Lang Syne” plays. When all those things happen at once, it can only mean one thing: New Year’s!
We all love a good New Year’s celebration, but with it comes the reminder of goals, responsibilities and resolutions for the upcoming year. And if you’re like most people, somewhere in the middle of all your resolutions is money—as in, the desire to manage it better.
If any of your resolutions for 2015 involve money, then your success will start with a budget. I know: The dreaded “B” word. Sure, creating a budget and cash flow plan doesn’t really sound like much fun. But doesn’t it sound more fun to go on a vacation with your friends or family and come home without worrying about credit card bills and debt?
That’s what you can do when you make a plan for your money—one that involves dumping debt, cutting up credit cards, and living debt free. You’ll give up on your resolution much more quickly if you don’t have it written down.
So how do you start? First, figure out how much money you have to work with for the upcoming month—before the beginning of each month. This includes your income, your spouses income and any extra income you all may have.
Spend every dollar on paper, on purpose, before the month begins. Give every dollar a name. This is called a zero-based budget, and it works. Basically, when you’re planning for the month ahead, you should be able to subtract your expenses (outgo) from your income to equal zero. When you’re done writing the budget, you shouldn’t have anything left over.
A good plan lives and changes as your life changes. You’ll need to review your budget each month throughout the year to make adjustments. If you budgeted too little in one area, then adjust. If you budgeted too much in another area, then adjust.
If you’ve been living without a budget, it will probably take you a few months to get the hang of it, and that’s okay. But in a few months, you should have a budget you can rely on.
A budget isn’t about complicating your life. It’s about knowing where your cash is going and making your life a whole lot easier. Just imagine how great would it feel to be debt-free and in charge of your finances in 2015. Sounds like a happy new year to me!
I want to hear from you! What are your top money goals for 2015?