It’s hard to believe that 2022 has already arrived. Luckily, with every new year comes the opportunity to improve, and there’s no better place to focus your efforts than on finances.
By setting a budget for the new year and planning fresh financial goals, you can ensure your success. Let’s talk about what your new budget entails, and exactly how you can plan out your year to meet all of those exciting 2022 goals.
Assess the Last Year
Before you can improve your finances, it’s important to first figure out where you stand. More specifically, you’ll want to evaluate just how well you performed last year in regards to budgeting, spending, and saving. Maybe you saved aggressively and paid off more debt than expected. Or perhaps the car broke down the same month that your A/C unit went out, and now your emergency fund is depleted. No matter what the last year held, it’s important to get a baseline before you can create a game plan for next year.
Set New Goals for a New Year
To make your goals more attainable, be sure that they are both specific and measurable. Rather than saying “I want to save more,” try something like, “I am going to put aside $1,000 by June.”
Your goals might include cutting household expenses, eating out less, establishing and building an emergency fund, paying down debt, and saving for future goals like retirement or buying a home. Each of these goals demands space in your budget, so it’s important to first outline what you’re working toward this year.
Automate Everything You Can
Ask your employer, or use your bank’s mobile app or web platform, to set up recurring savings transfers weekly or monthly. By paying yourself (and your savings accounts) first, you reduce the chance of overspending and running out of money by the end of the month.
Both of these platforms allow you to set budget goals, establish savings plans, and track your spending. If you overspend, you can not only get alerts but also easily evaluate where things went wrong. And if you are working toward these budgeting goals with a partner, an app can allow you both to share and evaluate real-time data from anywhere.
Check In Regularly
Your budget isn’t a rotisserie chicken: you can’t just “set it and forget it.” While most of the planning is done at the beginning of the year, you’ll still need to check in frequently to make adjustments.
Plan to reevaluate your budget at least quarterly, if not monthly in the beginning. See how you’re doing compared to your plan, whether you need to adjust saving or spending in either direction, and analyze your cash flow. If you need to make changes, it’s better to do them slowly and over time, than waiting until you get in a bind midway through the year.
Caliber Home Loans Inc., Mint and YNAB are not affiliated. This communication is intended to convey general information only and not to provide any legal or accounting advice or opinions. An attorney or accountant should be consulted for specific information.