By Miriam Caldwell
Updated December 15, 2015
As I was thinking about gathering together the financial goals for the New Year, I tried to determine what goals I should write about. I have suggestions for savings goals, career goals, goals to help you tackle your debt, but I wanted one essential goal that everyone in every situation should tackle so they can change their situation for the better.
One thing stood out as the most important thing you can do financially each year.
It does not matter if you make $35,000 a year or $350,000 a year. If you can achieve this goal, you can change your financial picture. You can be broke and spend more than you earn no matter how much you make.
How Will a Budget Make a Difference?
This year you need to set up a budget and stick to it every single month. If you can do this, you can take control of your finances. You can reach your other goals and you can see where you need to set other goals (like career goals). A budget may be one of the most basic financial tools, but it is one thing every financial advisor talks about. There is a reason. It’s the tool that gives you complete control over your money.
You can decide what to spend and when. You decide what to save and when. You can use a budget to stop going into debt and to find money to help you get out of debt. Your ability to budget controls how well you manage your money and determines whether or not you can make lasting changes.
Additionally, your budget will help you decide what your financial issues are. You may not make enough money, and you will need to find a way to make more money either by finding a better paying job or working part-time until you clear up your debt. You may realize that you make enough money, but you are spending too much.
You may realize that you would rather sacrifice in some areas so that you have more money to put towards the things you love to do. A budget lets you see when and where you spend your money, so you can decide how you want to do it.
How Do I Make My Budget Work?
Most people know the basics of how to set up their budget. Ideally, you should have a zero dollar budget that gives every dollar you have coming in a purpose, whether some of this is savings or going to pay off debt. This is the plan that you need to stick through each month. You can adjust by transferring between categories, and you may find you need to make adjustments as you try to stick to your limits each month in the categories.
Once you have the plan, then you need to find the right tools to make following your budget easier. A budgeting system can help you do that whether you decide to use budgeting software like YNAB or the envelope system, you will need to track your expenses each day so you know when to stop spending. This is the hardest part, but it will get easier as you keep working at it.
I Know All This, But I Still Can’t Follow My Budget
You may know the benefits of budgeting, but a budget is a difficult thing to execute.
It might be even more tricky if you are married and your spouse doesn’t want to budget. It may sound harsh, but the truth is either you want to change your financial picture or you don’t. If you want to change badly enough, then you will find the willpower to follow your budget. You will set up an emergency fund to cover the unexpected expenses that will come up during the year and you will begin to make the changes in your finances that will benefit you in the future.