As we begin another year, it’s time to create your financial goals and family budget for 2019.
Do you have enough income to live comfortably within your means? Why are you saving or reimbursing? Are you on track with your monthly family budget? Do you even have a budget?
Here are some helpful tips and worksheets to help steer you in the right direction with your 2019 finances.
For those of you new to budgeting, this will give you a clear picture of your financial situation as it relates to your income versus your expenses. For those of you who already have a budget, this is a reminder to review the numbers and make sure they’re still accurate. If there have been changes in your income or expenses, now is a good time to revise your budget.
One of the best ways to stay on track with your financial goals this year is to create a family budget. If you don’t have it, you need it – now. It’s like a best friend who wants to help you get out of debt and achieve financial freedom. Listen to what it “says” and you will know what you need to do to live comfortably within your means. It’s a powerful piece of paper!
A baseline budget shows you how much money is coming in, how it’s being spent, and how much you have left at the end of the month (and hopefully you have left). Budgeting is serious business, and an achievable and realistic budget is key to helping you achieve your financial goals.
Prepare to sit down with your financial records, pencil, calculator, scrap paper, and maybe lots of chocolate (trust me, you’ll need it). Feel free to work on part of the budget one night and finish the next night. Creating a budget can take a few hours, but it doesn’t have to be a long, marathon session.
To develop your family budget, follow these steps:
1. Start by printing the Budget spreadsheet HERE.
2. Review the categories in the spreadsheet and modify them according to your income and expenses. Add and remove categories as they apply to your specific income and spending habits.
3. Calculate your average monthly income, including net employment income, spouse’s income and all other sources of income.
4. Use your checkbook, bills, and receipts from the last two or three months to calculate the average of your actual monthly expenses in the budget categories shown.
5. For expenses that occur more or less frequently than monthly, convert the annual amount to a monthly figure when calculating the monthly budget amount. For example, if your home insurance is paid annually, divide that annual cost by 12 to get the monthly amount.
6. Add the income category and add the expense category.
7. Subtract total expenses from total income to calculate your net income (Income – Expenses = Net income)
8. If your net income is a positive number, good for you! This means that you have money left over at the end of the month after paying your expenses. Use any extra money to pay off your debts and increase your savings. Remember that extra money left in a checking account tends to get spent.
9. If your net income is a negative number, then your expenses are greater than your income and it’s time to make some immediate adjustments to your expenses. You’re living beyond your means and it’s time to apply some frugal living techniques right away. View the article “Getting Out of Debt” for more information on paying off your debt.
10. Review and update your budget quarterly (or at least every 6 months) to see if any changes need to be made and to make sure you stay on track. I know this sounds like a lot of updates, but you can see at a glance if anything has changed in the categories and make changes as needed. Your budget will tell you immediately if you are spending more than you should. “Listen” to him carefully and heed his warning if you overspend.
11. Once you’ve completed your budget, it’s time to record your daily expenses to determine where you can cut expenses and control total expenses. Track your expenses, every day, for everything you spend in a month (minimum of 2 weeks). I know this sounds like an incredibly tedious project (and it is), but it works – I promise. At the end of the month, you’ll have a crystal clear picture of where your money REALLY goes and which non-essential expenses you can cut right away to get a positive net income.
Set financial goals
* Use a financial goals worksheet like the one in thebalanceeveryday.com HERE. List your short, medium and long term goals. This spreadsheet will help you determine how much you need to save each week/month in order to reach your financial goals within the specified time frame.
* List your goals on the worksheet. Be sure to work with your spouse to set the goals so you’re both on the same page when it comes to spending and saving.
* Determine how much you will need to set aside each week to achieve each goal within a specific time frame.
* Modify your household budget to include amounts for goals.
* Post your goals in an easy-to-see place to keep you motivated and on track.
* Review your goals on a monthly or quarterly basis to make sure you’re still on track. If you find that you are not meeting some of your goals, you may need to change your spending habits or modify the spreadsheet. Life happens and sometimes you can’t achieve a goal when expected. The key is to keep working towards the goal.
You have now walked through the telling world of budgeting and should have a much better idea of your financial situation. Keep updating your budget, especially as your expenses go down and you live more frugally. Here’s to a fabulous, frugal and debt-free year!
As I always say, it’s your money – spend it wisely!