Year-End Budget Review: How to align your spending with your goals
“Mother, you’ve copied me on the financial standings of this company for 17 years. You just assumed I couldn’t read.” - SABRINA
written by Barbara Benedek & David Rayfiel, directed by Sydney Pollack
(3.5-minute read)
If you’ve ever thought to yourself “I’ll be better this year” but failed to live up to that promise, you’re not alone. This can be anything from exercise, to mental health, to finances, or anything important to you. There might have been a hundred different things that kept you from your goal.
Now it’s the end of the year and you’re kicking yourself for not being better with your money. It’s okay! It doesn’t have to be a whole thing. Here are some tips on how to quickly assess your year as well as establish good habits heading into January.
WHAT ARE YOUR HABITS?
We all have spending habits. Sometimes these are good and sometimes they need a little work. To steal an overused phrase, sometimes we have to “adult.” This could mean spending less in certain areas. But that could also mean shifting spending from one thing to another. For example, if you have a habit of dining out that’s blowing up your monthly budget, you can reduce spending there, but increase your spending on groceries. By increasing your grocery expenses, that should reduce your dining out expenses. I’ve also seen clients find a happy medium by spending more on prepared meal kits. Yes, these are more expensive than groceries, but they’re also cheaper than going to a restaurant.
Take a look at where you’ve spent the most money this past year. If you need to change some habits, there’s no better time than January 1st. It’s an arbitrary date but it works for a lot of people. You can arbitrarily make it December 14th. It’s your life; make up your own rules. Similar to the above example about prepared meals, you can start slow. Perhaps you begin placing a small amount into your savings account or IRA. Then you can increase it once you’re comfortable. It’s about creating positive habits.
GET ORGANIZED
There are plenty of software programs and apps that will categorize your expenses for you. If you haven’t been keeping up with this throughout the year and, let’s face it, if you’re reading this then there’s a 99% chance that statement is true, these programs can quickly do it for you. You just have to make sure it’s accurate. Perhaps next year you can have a goal of doing this on a monthly basis.
In the financial industry, we can get in trouble for using the word “guarantee.” However, if you think you know how much you’re spending on a monthly basis, but you haven’t written it down, I guarantee you’re wrong. It’s not just writing it down. Your transactions have to come in to a software/app/program so there is no guessing. Seeing all of your transactions on a screen can help ensure there are no errors. It’s also very sobering. It can be painful, but it’s a necessary evil.
SPEND MORE MONEY ON YOUR GOALS
I went through a budgeting exercise a few years ago. At the time my career felt stagnant. It wasn’t moving in the direction I had hoped. Then I saw how much money I was spending on my career, and it was next-to-nothing. So I increased it. Within a few months, I was heading in the right direction, and things started to take off. I don’t think it was a coincidence.
If you have goals for your life, career, and finances, think about increasing the amount of money you’re spending in those areas. If you have a goal to save X amount of dollars for a wedding next year, but you’re not putting any money toward that, then how do you expect to achieve it? I look at our career goals the same way. I wasn’t spending money toward achieving my career goal, so why did I expect my career to thrive? My goals and my spending were not aligned.
Just the thought of creating a budget on paper can make some creatives nauseous. By utilizing user-friendly technology along with good, monthly habits, it can become a very easy, and goal-changing, experience.
If you’d like more information about budgeting, you can schedule a complimentary meeting HERE.
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