The new year is supposed to be all about fresh beginnings, but by mid-January, we often find ourselves tired of self-control … and the guilt associated with falling off the resolution wagon–especially when it comes to our finances.
But it doesn’t have to be this way.
If you have a good budget in place, you won’t have to worry about being bad about money (or beat yourself up about failing), because all you have to do is follow your budget plan.
Since things change every year–particularly when you have a family!–it’s important to revisit your budget now to ensure that it fits your life for the year to come.
1. Take Stock of Where You Are
You can do this the old-fashioned way: Go through your receipts, look at the budget that you’ve outlined for yourself and then compare it against your actual spending.
To see just how you’re trending, take notes on these points, in particular:
- Whether you’re over or under budget. Maybe you spend more on that daily morning coffee than you care to admit. Or you assume that you’ll spend a ton on groceries, but you actually aren’t using the whole amount each week, leaving some resources that could be better allocated for other family needs.
- Any spending that’s changed–and that will continue to change as your kids get older. For example, perhaps you’re no longer shelling out for diapers, but you now have to contend with paying for preschool. Similarly, maybe you buy clothes less frequently because your teen has hit her final height and shoe size, but now you face pressure to give her money to spend with friends.
- Any new expenses that you need to save up for, such as braces or a month at summer camp.
- Progress (or lack thereof) toward your larger financial goals, including retirement and saving for college. Make sure to note your successes over the past year–as well as ways that you’d like to improve.
2. Compare Yourself to the 50/20/30 Rule
LearnVest follows the 50/20/30 Rule, which says that 50% of your budget should go toward essential expenses, 20% should be allocated for financial priorities and 30% should go to your lifestyle choices.
Compare your current budget to the 50/20/30 breakdown to see how you fare. To do this, you can spend quality time with a calculator or use our Budgeting Tool to automatically compare your budget against the 50/20/30 recommendations. It’s important to note how much you need to increase or decrease each section of your budget to get in line with 50/20/30.