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Budgeting Blitz: 5 Steps to Win the New Year

budget blogging

Let’s face it, budgeting is no one’s favorite topic. But as we enter the new year with a fresh perspective and full of inspiration for the year ahead, you may realize that now is a great time to start fresh financially too.   

Follow these steps to discover what’s possible when you manage your money right.   

1. Track your spending

Start by capturing your monthly expenses (yes, everything!) in our budget worksheet. Summit members can also use our Climbr® tool, which pulls in your transactions to help you monitor your expenses and create a budget. We’d suggest logging your expenses over several months to get an accurate picture of your financial situation. 

2. Do the math (or let us do it for you!)

Our budget worksheet automatically calculates your net income for the month. Pretty nice, huh?  Then, once you know where you are financially, you can plan your approach to the new year. One tactic to try is the 50-20-30 Rule. The idea is to plan your budget so that 50% of your income (after taxes) goes toward your essential living expenses. Then, 20% should go toward your financial goals, like paying off debt or saving for a home. The remaining 30% is for you. Spend it on the little luxuries, like clothes, coffees and TV subscriptions, or set something aside to save for a vacation or big-ticket item. 

3. Prioritize your expenses

As for your financial goals, repaying debts with the highest interest rates should be your first priority. Paying off high-interest debt first means you’ll pay less total interest in the long run. And if possible, you should start saving for retirement as soon as you can. The more time you have to grow your money, the more income you’ll have to enjoy in your retirement. With Summit, you can also create nested savings accounts for specific priorities in the shorter term, like family vacations, birthdays or pet care. Not sure how to balance competing priorities? Schedule an appointment with a Summit financial advisor.

4. Eliminate something nonessential 

Try eliminating one thing you don’t really need. Are you signed up for multiple subscription services? Challenge yourself to cancel the one you use the least.  Are you eating too much take-out? Make it a point to cook at least one homemade meal a week. The exercise of eliminating nonessential expenses will put you in the saving mindset. Budgeting doesn’t mean never treating yourself, it just helps you be a little more strategic about which treats you choose.

5. Treat yourself 

And speaking of treats, it’s important to reward good habits. Once you take yourself through a budgeting exercise, treat yourself to something nice (but still within your budget!). May we suggest a bottle of your favorite wine?  

Make it a goal to repeat this process quarterly, and you’ll be on track to have your #BestYearYet. Got questions? You know where to find us.

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