It’s that time of year, when the sun is slowly making its way through the winter clouds and the desire to run outside in only a sweater is oftentimes crushed by the always changing temperatures – at least that’s life in the Midwest.
We are at the time of year that is quiet, without color, and a perfect opportunity for reflection. You may know this season well – it’s Lent. Christmas has passed, the deep dark days of winter are fading away and it’s time to begin planning for a new season. During these late winter months, we are beginning our seeds for our spring and summer gardens and prepping our landscape plans for the year.
This is the time of the year to plan, but take a moment to save too. Life is a roller coaster – we hear that saying all too often. To assume that we can always be in a constant state of up or down is presumptuous. Instead, let’s use the ups and downs as time to rebuild or bask in our earned goals. Utilize this time of the year to rebuild your budget. Here are some ways to start from scratch to prioritize expenses, re-examine your income, and plan for the future.
- Begin from Scratch. Put aside your budget from last year. If you didn’t budget last year and this is your first time, then enjoy the process! If you have a budget from last year, don’t look at it again until your new budget is created. Make a list of your financial goals – short-term and long-term.
- List your income. Make a detailed list of your income. If it’s a consistent stream and it comes in twice a month, mark those dates. If your income is less consistent, estimate your monthly income and which dates you assume a certain amount of money will be earned. The quickest way to find exact earnings is through financial statements.
- Track your expenses. Be honest. The details of your expenses will assist in determining the possibility of attaining future financial goals. If you aren’t honest with your budget then you will answer for that in the future. If you have a steady income and have money to shift around easily, then a general list might be more of your speed. This is all determinant upon how much money you are looking to save, spend, or invest. The more detailed and concentrated your expense list, the better ability you will have in saving and investing money. You will also want to determine which of your expenses are fixed (remains the same – rent, car payment, internet, etc.) and which expenses are variable (changes – food, clothing, energy, etc.)
- Total Income and Expenses. Do this in separate columns. This will show if you are short each month, breaking even, or the amount of excess money for saving/spending.
- Adjustments are Always Needed. Re-visit those financial goals and adjust your budget where needed – less spending? more saving?
- Compare Budgets. If you have a budget from last year, now is the time to revisit that. Compare the old with the new. How have you progressed from last year? Were financial goals met in the previous year? Where did you fall short? Did you have an opportunity to save or invest more money than you expected? Have you paid off any significant purchases – car, house, condo, etc?
- Celebrate. Don’t forget to celebrate any financial goals you have made. This doesn’t mean go on a shopping spree, but maybe enjoy a dinner out if you have been eating in all year or a specialty coffee if you haven’t been going through the cafe drive-thru.
Enjoy the budgeting process, but don’t be too harsh on yourself. This area is easier for some people than others, but just because it might be difficult to budget that doesn’t mean you shouldn’t do it at all. If tight, detailed budgeting isn’t your thing – focus on a more generalized budget that leaves room for movement. This is YOUR budget and YOUR goals, so be honest with yourself, but also kind. Rome wasn’t built in a day and you won’t pay off your home in a day, but little steps count!