Refreshing Your Budget for 2023
Many people avoid looking their finances squarely in the face because they're afraid of what they're going to find. But often, matters are not as bad as they seem. When you keep avoiding something, it starts looming over you in an ominous way. But when you sit down to actually look at your finances, they might turn out to be in better shape than you imagined. And even if they're not, isn't it still better to know what you're dealing with? This will enable you to make a plan for better financial health in 2023. Here are a few budgeting tips:
Make Time: Put aside at least half a day for looking through your finances. Make sure you have all your bills—paper or electronic—in one place. Also make sure that your mind is fresh when you begin or else you are likely to get overwhelmed quickly. Get your cup of coffee and a few snacks. Close the door. Now you can begin.
Calculate Your Expenses: You can start by making a list of all the places where your money goes on a regular basis. These might include your rent or mortgage, utilities, transportation, clothing, food, insurance premiums, retirement plans, children's food/clothing/school expenses, phone bills, WiFi, coffee etc. Everyone has different expenses, depending on their likes and dislikes as well as their life circumstances. The best thing to do at this point is not to judge. Just write down everything that comes to mind.
Calculate Your Income: Once you have a list of all the things that you spend money on, you'll need to make a list of all the places from where you get income. Do you have a salary? If you're not just doing your own budgeting but a whole family's, then make sure you consider all the salaries that people are earning in the family, even if some of them, such as your kids, are just working part-time jobs to make a little bit extra money. If you have a rental income, consider this. If you have invested some money and are receiving dividends, factor those in. Be sure to include your tax return and any monetary gifts you receive.
Compare Income and Expenses: The obvious next step is to compare the money coming in every month with the money going out. Ideally, the money coming in is going to be more than the money going out so that you have some savings. But even if the two are equal or the money going out is a little over the money coming in, then your financial situation is not out of control.
Cut Down Large Expenses: If you need to start saving money, then take a look at your big expenses, such as your rent/mortgage and college expenses. If your rent is sucking up a lot of your income, then think about moving somewhere more affordable. If you're unable to keep up with college expenses, think about applying for scholarships or moving to a school where the tuition is less.
Cut Down Small Expenses: If you don't have any large expenses that are a drain on your income, then it's time to start looking at the smaller expenses. How much are you paying in insurance every month? Are you eating out a lot? Do you make a number of impulse clothing purchases? Are those expensive cups of designer coffee adding up to a large number? At heart, everyone knows what their extravagances are. You don't have to give up everything you love at one go. Just put a cap on it. Tell yourself you'll spend a certain amount on coffee or eating out and then, don't go over that number.
Make More Money: Another obvious way to stay within your budget is to have more money coming in. If you've only been working part-time but want to start putting in more hours, then start doing so. If you run your own business, look for new customers. If you think you deserve a raise, then ask your boss for one. Tell him/her you'll be willing to take on more responsibility as well. If your teenagers want more spending money, gently suggest that they get a part-time job to pay for it.
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