How to budget in 2015It’s a new year and time to make some great changes!  Is yours going to be starting a budget and getting your finances in order? The first of the year is the best time to get your finances in check and start on a budgeting making expedition. Here are some budget-making tips for 2015 that may help get you started and succeeding financially.

Track Your Spending

Before you can make a budget, you need to know what you make and what you spend.  Take a month to track absolutely every expenditure and try to think about the ones you don’t have every month like home insurance.  This may be a little painful if you happen to spend more than you think you do.  But it’s okay, it’s for the greater good!

Even after you create a budget, it pays to continue tracking your spending to ensure you are staying on target.  You’ll also want to know if something needs to be revised or added further down the road.  If you’ve never tracked your spending, then I recommend and use Personal Capital. Not only do they track your spending, but you can also track investments if you have any. If you want a more budget focused site, then check out Mint.com.

Make a Realistic Budget

Once you know what you’re making and what you’re spending, you can tackle making a realistic budget.  A simple, solid budget is made up of a list of spending categories and your target to stay under in each of them.  It truly is way easier than it feels.  Use one column to write out categories like “Mortgage”, “Rent”, “Food”, “Insurance”, etc.  Then write down the amounts next to them that you can realistically aim to beat.

Related: Simple Budget Calculator

The trick is to set targets that are right where you need them to be or slightly higher without being so much that you can’t put aside enough for your other goals.  Budgets aren’t meant to be negative and restricting.  They are meant to help you save for everything else you want too.

Start Looking at Ways to Cut Where Possible

If you notice that you need a larger difference between your income and your expenses, start looking at each spending category with saving in mind.  Could you move to have a smaller housing bill?  Could you switch insurance, cell phone, or electric providers?  Could you buy groceries instead of eating out as much?

Look at every expense with a critical eye and you will be amazed on what you won’t be spending anymore.  Try looking at the largest expenses first since details matter, but the big stuff is where you can feel the difference right off the bat.

Alternatives

If your income simply isn’t exceeding your expenses, it’s time to look at alternatives.  You could get a side hustle or second job.  You could rent out a room in your home.  You could use your emergency fund.  You could borrow from your 401k or take principal out of a Roth IRA.  You could take out a loan from a bank, get a personal loan, or try out P2P lending such as Lending Club.  You may even be able to move in with relatives or friends.  Many of these alternatives are last resort type of deals. You shouldn’t focus on them first. They would be the step before you declare bankruptcy in many instances.

Did any of these tips help you?  What are you tackling in 2015?

 

Image via StockMonkeys.com

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