If the idea of budget planning and cutting back on spending is making you anxious, now may be a good time to create a completely new budget from the ground up. Balancing your budget does require taking an honest - a really honest - look at your spending habits and current expenses. If you're not saving money each month and always seem to be struggling to make ends meet, you might be stuck in a spend-as-you-go cycle. One of my best strategies is to project expenses and track expenditures as I go.
Here are five painless ways to balance your budget in the New Year:
1. Budget for transportation expenses. Do you plan on buying a new car this year? How much do you anticipate spending on maintenance and repairs of your existing vehicle? Remember that it can cost you more in the long-run if you don't perform maintenance checks and get your oil changed on schedule. Anticipate these costs now so you know how much you need to set aside for your vehicle. I like to use calculators like these to determine by "true" cost of driving my vehicle - and budget accordingly.
2. Recreate a food budget. Your food-related expenses may be among your biggest costs each month, but there are some ways to be smart about your spending. Planning meals ahead of time, making use of leftovers, and eating out less can all help to keep your budget balanced this year. Be realistic about how often you can cook at home instead of eating out, and buy wholesome foods that support a healthier lifestyle.
3. Create a clothing budget. Do you have an idea of how much you spend on clothing and accessories each year? Total up this past year's clothing expenditures to get a ballpark amount. Decide whether you want to take this amount right out of your savings for the upcoming year, or earn it as you go by setting aside funds specifically for clothing expenses in the upcoming year. Knowing how much you are going to spend in this area can help you have more control over your finances.
4. Stretch your health care dollars. Make good use of your health care benefits this year and plan on using all of your Health Savings Account (HSA) dollars so you don't miss out on some extra savings. Rising healthcare costs can put a dent in your budget, so take the time to review your current healthcare plan and benefits, and keep good track of your medical expenses.
5. Evaluate membership and subscription costs. Take a good look at the cost of that gym membership, movie rental subscription, and other "extras" to determine how much you are spending in these areas and how much you are getting out of it. If you rarely go to the gym, change your workout regimen to at-home workout DVDs instead. Consider renting movies as you go so you're not tied to a subscription. These costs can add up by the end of the year so scaling back now could help to keep your budget balanced.
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