Five Budgeting Tips To Improve Your Personal Finances This Year

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Whether you find budgeting a boring chore, or sexy as hell, there are a few ways you can make the process more rewarding.

Review first

Doing an annual review will help you prepare your budget for the coming year. While most people budget on a monthly basis, it’s important to remember that not all months are the same. Most of us have annual or quarterly expenses, so knowing what you’ve spent over the last year can be really helpful.

The money for those annual and quarterly expenses can still be set aside monthly. You just need a system in place to ensure that money is clearly allocated to a future expense. Seeing what your fixed and necessary expenses are, for the whole year, helps you allocate the right amount of money to them each month, and see more clearly how much disposable income you really have each month.

Budget as a team

Everyone who has the power to spend the money needs to be involved in the budget. So if you’re married, or part of a couple who share finances and expenses, you need to budget together or at least ‘in tandem’. What does that mean exactly? It means it’s fine to have your own money and run your own finances (yep, even if you’re married). But there will always be joint expenses and joint goals, that need you to cooperate and draw up at least some of your financial plans for the coming year together.

Create a value-based budget

Basing your budget around your values simply means you align what you spend your money on with what you actually value. This sounds like something most people would do automatically, right? Most of us don’t. Many of us value ‘giving back’ but take the attitude that we’ll give ‘what’s left’ rather than intentionally budgeting our giving. Some of us insist that we value family above all else, then don’t budget a single cent for a separate category that involves visiting distant family members. Then we complain at the end of the year that we didn’t ‘get to’ see family much this year. A value-based budget helps us allocate money to the things that make us happiest.

Budget around your goals

Budgeting around your goals is related to budgeting around your values, as values often inspire goals. But goals are more specific. If family is a value, then a trip to visit family in New York for a week this July is a goal. If giving is a value, then a commitment to give $50 a month to a specific charity is a goal.

Not all goals need to be noble or even value-based. Some can be pure fun. It’s been a challenging year for many, and not just financially. One of the things keeping many of us going right now is planning for a little fun in the future, no matter how uncertain that future may be. Setting goals, big and small, for the long and short term is a healthy way to give ourselves a boost. Working the financial aspects of those goals into our budget is a way to make sure they happen or at least remove one of the many obstacles that could crop up to stop them from happening.

Use the tools that suit you

Some people still budget on paper, and that’s fine. It really helps you see things clearly when it’s all laid out in a physical format. There are, however, plenty of online tools and apps that can really work for some people. Budgeting tools like EveryDollar, Mint, and PocketGuard can be invaluable.

Don’t look at budgeting as a chore. Look at it as a way to work out how to live your best life, on the money you have, whatever that happens to be right now.

Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen