If finances play any role in your 2019, you’ll need to have a plan to maintain them. And yes, that means any role — even if those financial goals are just maintain your exact same financial status. You don’t need to have lofty saving or spending goals to need a budget and a plan. Here are three steps to get you started.
Without knowing what your current spending and savings habits are, it will be hard to record or account for them. More often than not, people are surprised to learn how much they’re actually spending versus what they think they are. Before you begin, take a guess how much you spent each month on utilities, food and entertainment. Track without adjusting your behavior for a month and see how close you are.
Determine necessity, luxury and goals
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Once you have observed your financial habits, you can change them accordingly. It’s wise to know what qualifies as a necessity — food, shelter, clothing — and what is a luxury — eating at a restaurant, going to the movies, online shopping.
Deciding what is necessary and what you could forgo if you needed to will help you when you set a goal. If you have an aggressive savings goal, for instance, you could cut out 90 percent of your luxury spending. But if you’re dedicated to maintaining your finances without spending or saving outside your current range, then you’ll still know the numbers you need to hit. Regardless of your goals, always prioritize necessity.
Choose a method
Track your financial activity to make sure you’re staying in the range of spending and saving that you’ve established. Whether this is pencil and paper, a digital spreadsheet, or a budgeting app, choose to record after each purchase, or record all the day’s purchases at the end of each day. Find what works for you and make it a habit.
The best part about having an established budget is that as your goals change, you can easily shift your behavior because you’re aware of it and recording it. As your life and your plans change, so will your budget.
Kat’s Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, visit http://communityamerica.com.