Budgeting Tips for the New Year

For many of us, the first thing we’ll address in the New Year will be how to improve our finances in the coming year. Maybe this New Year brings something specific you’ll need to save money for, or maybe you’re just resolving to be more financially disciplined. But no matter what you’re saving for or why you’re doing it, creating a budget is the best place you can start. In this guide, we’ll provide tips you can use for a more financially secure New Year.

• Anticipate Changes – If you have any large changes that you can anticipate, like a college tuition bill or a new mortgage, incorporate it into your plans as early as possible – even if you do not know what the value will be. Waiting until you know the exact value may not leave you enough time to adjust other expenses.
• Make Conservative Estimates – When you don’t know the future value of something, make conservative estimates. Shift expenses a bit toward the high side, and income a bit toward the low side. Conservative estimates give you a cushion in case things do not go as planned.
• Review Previous Results – By now, you should have a pretty good idea of what goals you are going to meet this year and which ones will fall short. You will know if you need to reduce your spending, increase your savings, cut your debt, or adjust in some other fashion.
• Set New Goals – Revise your goals based on your review and proposed changes. For example, you may decide to accelerate your savings to meet a down payment goal for a new home.
• Check Your Credit Score and Credit Report – Your credit score affects the interest rates you qualify for on credit cards, mortgages, and other types of loans. A bad score can wreck your budget, preventing you from getting credit and increasing the amount of interest you have to pay every month. Identity thieves can also ruin your credit score by creating new accounts in your name and racking up unpaid bills, so it is essential to check your credit report and look for any errors or signs of fraud. 
• Adjust Your Budget Accordingly – Your income, expenses and priorities will continually change. A monthly budget works best for many people but choose whatever time frame works best for you and adjust accordingly.