While right now you are probably fairly preoccupied wit thoughts of Christmas, you may also be looking ahead to what the New Year will hold. While a new year may represent a fresh start for you in a variety of ways, one important element you are likely to spend some time thinking about is your finances.
With 2016 almost nearing a close, it is worth your time to consider how you will manage your finances over the course of the next year. While you might already feel that you have a sufficient and workable 2016 budget – a good rule of thumb however, can be that just as the year changes, so should your budget.
Perhaps in 2016 your finances have not been as strong as you would like and you want to see improvements during the following year, therefore, taking steps to re-organize your budget will be a good idea.
Here are 4 ways to refine your budget before 2017 arrives.
1) Start Fresh from Where your Finances are NOW
As you begin to plan ahead for the upcoming year, it is important to remember that you can’t do anything to change the way your finances have been over the course of past 12 months or even longer. Instead, you can start to look forward and plan for the future. Starting fresh from where your finances are now can also take some of the pressure off with regards to any mistakes you may have made in recent months.
On the other hand, it is also a good idea to learn from these errors and plan to do something differently moving forward. Ultimately from seeing what worked and didn’t work, you can plan to revise your budget so that it can be much more effective for you moving forward. It is at this stage of the refining process, where adjusting your thinking or mindset will help jump start your ability to improve your budget for 2017.
2) Cut Down on Unnecessary Expenses
Secondly, here is where you start identifying what should actually be included in your budget, as well as what should/will not be added. For example, perhaps one major reason that your spending patterns were unsuccessful in the past is that you had too many expenses. If spending beyond your means was a key contributor to your lack of financial success, then here it will be necessary to cut down on these expenses wherever you can.
While some expenses will not allow for any wiggle-room, there may be other areas that you can eliminate. Certain expenses such as cable, internet, phone, and even groceries could be either removed completely or at least areas where you can reduce the amount you are paying towards each expense every month.
By cutting back on these expenses, you can perhaps save more money that you will pay towards your debts. While paying down your loans not only means you will carry less debt, you can also reduce the amount of interest you have to pay over the course of an entire year. All in all, budgeting can improve your finances in a variety of ways, including helping you to re-build your credit score as you make your way through 2017.
3) Take Irregular Expenses into Account
Another positive outcome that can come from reworking your budget is to allow you to save some more money over the course of the next year. As you have already cut-back on some of your expenses, your new budget with the new ‘spending limit’ can allow you to lower the amount of outgoing money you have each month.
You may also be able to save some more money each month too. When thinking about refining your budget, it is also a good idea to consider factoring in a certain amount of irregular expenses too. Taking into account expenses such as emergency funds or saving towards further debts, etc. are an important part of any budget as it can mean you are less likely to be hit with huge bills you can’t pay as well as creating more debt for yourself.
In the end, saving a bit of extra money each month never hurt anyone, and even if you don’t end up having to use it for an emergency of an kind, you still have some reserves for any future necessities that may come your way.
4) Use a Budgeting Tool
Lastly, as you prepare to create a new budget for your 2017 needs, you may also want to consider the use of a budget tool. Fortunately, these days there are a variety of options, many of which are free and that are designed to help individuals track their spending with more ease. While not all budgeting tools will be a good fit for all, if you have had trouble in the past sticking to your budget then, perhaps any one of these would be worth a try.
For example, smart phone and other devices utilize apps that are typically relatively inexpensive, perhaps even free in some cases. Then there are other downloadable options that can be found online or can be downloaded, often with an upfront or monthly fee.
Now with that being said, if using a good old spreadsheet is better for you, then it is always better to use a tool that is you are more comfortable with. So trying out a few or asking around about what alternative budgeting tools may be most favourable among other budgeters is also a good place to start.
In the end, even though you might dread the thought of budgeting, the reality is it can be a highly effective method of improving our spending and in turn our overall financial situation. Especially, if your current financial reality does means bad credit, then starting to look ahead to how you will go about spending your money is 2017 will be a very important course of action for you at this stage of the game.
As you recharge from Christmas and begin to plan for the new year, also remember to take into account ways you can refine your budget and your finances before the arrival of 2017.