A year of earning, spending, and hopefully saving is rapidly drawing to a close. As you prepare to bid adieu to 2013, there’s no better time to start thinking about next year’s family budget than right now.
Even with all of the holiday shopping and festivities, there’s still room for some reflection on past goals and how well you met them.
Improving your budget for 2014 can make next year’s holiday season even brighter.
Here are three simple tips to get you started:
Examine Expenses for the Year
If you’ve managed your budget throughout 2013, information about your expenses should be handy.
Examine each category and determine whether you’re doing the best that you can, or if you can cut back and add more to savings next year.
If you kept all expenses in one lump category, sort it for a better idea of what you’re spending where.
You’ll need a category for fixed expenses such as your mortgage or rent and vehicle payments, variable expenses such as credit cards, household expenses such as utilities, cable, Internet and cell service, and as many other categories as you care to use.
One of the most important categories is discretionary expenses. These are controllable purchases and include a cup of coffee, manicures, dining out, entertainment, and everything else that’s not mandatory.
With your categories lined up, it’s time to tally, both by month and for the year. This serves two purposes. You’ll see spending patterns, and you’ll probably spot at least one area where you can improve.
Patterns can emerge as anything from a peak in outgoing cash during certain months to many more cups of specialty coffee than you realized you’d bought.
Assess Savings Progress and Goals
Your savings is your lifeline, and you need more than one basic savings account. If 2013 wasn’t as financially healthy as you’d like, commit to making 2014 better.
Emergency savings is critical, and you need at least 3 months salary set aside (6 – 9 months is better) to carry you through in case of a job loss or other traumatic event.
If you only have one savings account and dip into it as needed, a separate emergency fund should be a new priority.
The results of your expense examination come into play here. That’s where it’s easiest to find money to redirect into savings.
The total, or at least a portion, of those extra expenses you doled out could be drawing interest in your savings account, not the account of the retailer you gave it to.
With that in mind, find areas to cut back and add to your savings.
The season of resolutions is the perfect time to make new financial goals for the future. Emergency savings is a great start, but what about retirement, college, or that dream vacation?
When preparing a new budget, you might consider setting additional goals and working toward them a little at a time.
Install New Budgeting Software
One of the best things you can do for your financial fitness is install budget software on your computer.
Not all software is created equal, though. You want an option that makes budgeting simpler, not harder.
With Mint.com, setup only takes a few minutes. Add accounts easily, and the software does the rest.
You can create a budget with different goals, and see your progress daily. And any time you want to adjust your budget, that’s easy, too.
By the time the end of 2014 rolls around, evaluating the year and setting brand new goals will be a lot easier.
Mint.com takes the complexity out of budgeting. With the mobile app for tablets and smartphones, it’s also portable and sharable between devices, if you like.
Sign up for your free account today, and make 2014 your best financial year ever.
Mary Hiers is a personal finance writer who helps people earn more and spend less.