As this year comes to a close, it’s important to remember what you’ve accomplished financially so you can set realistic goals and intentions for the year ahead. One of the best ways to establish financial security is by carefully and methodically planning a household budget.
The thought of creating a household budget can be daunting; however, we’ve identified some ways to help get you started:
Identify a Budget Template
There are a lot of options to help you plan and track your budget. Some budgeting templates are free and others have a small fee associated. Free apps include CreditKarma, Empower and Goodbudget. Apps such as Honeydue are great for couples and allows users to sync bank accounts and set spending limits together. Budgeting templates and apps available with a small monthly fee include EveryDollar, Quicken, YNab (You Need A Budget), Rocket Money or NerdWallet.
Understand Your Expenses
When you look at your expenses, consider bills, debt, childcare, entertainment expenses as well as pet costs. Determine which expenses are fixed (do not change) and which expenses are variable. Consider that financial experts say that 50% of your income or budget should be directed towards necessities (rent/mortgage, utilities, food, childcare costs, and transportation), 30% should be wants (new clothes, vacation, entertainment, and/or dining), and 20% should be allocated to your savings account and debt repayment.
If you need additional help, you can always reach out to an advisor, who may recommend different ways to track your expenses including the snowball method, cash or envelope stuffing, and zero-based budgeting. A well-known advisor, financial expert and radio personality, Dave Ramsey advises categorizing expenses into food, utilities, shelter and transportation.
Make sure you track all your expenses consistently each month.
Reflect on How You Spend
Be transparent and honest about how and when you spend money. Look for ways to cut some of your existing expenses. Here are a few ideas:
- Review the streaming services on your TV. Are you using them all? If not, cut the ones you don’t use.
- Evaluate insurance costs by scheduling a policy review with your insurance agent. New features, or purchases can all impact your policy(s).
- Make sure you track all expenses, big and small. For example, are you including your daily Starbucks run in your budget as a variable expense?A few dollars of indiscriminate spending each week can add up. A $6 coffee, 5 days per week will become an extra $120 per month.
As you head into 2025, make a list of the things you want to do or accomplish financially in 2025 and identify the costs associated. Look for ways you can really manage and activate your budget so it’s working for you, not against you. You work hard for your income, so make sure your dollars are working hard for you as well!
For more information on ways to save on your household budget, reach out to us any time!