8 Budget Tips to Start Your New Year Right

With the new year comes the opportunity to make a fresh start in every area of your life. This is especially true in the area of getting on track with your finances.

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Your budget is a great place to start. You might find your existing budget has a few outdated goals in it, could use a new method for tracking your overall finances, or there’s some extra financial wiggle room in which you can focus on creating an emergency fund. No matter what the reason, you can start the year right by following these steps. help of these budgeting tips.

Review Your Financial Goals

Many people start the year by setting goals. Consider what your financial goals and resolutions are for 2023.

What are you most passionate about doing with your money in the coming year? For example, let’s say your financial goal next year is to max out your traditional IRA or Roth IRA. According to IRS, the total contributions you would be able to make to a traditional IRA or Roth IRA cannot be more than $6,500 if you’re under age 50 or $7,000 if you’re age 50 or older. Once you have decided what your financial goals are, you can start estimating how much money you will need each month to achieve them.

Make a list of all your financial goals for this year and any goals that you have not achieved yet. Don’t set any goals that don’t apply to you anymore. You should consider any life events, such as a raise, which could impact the goals you set for next year.

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Check Your Expenses

Your expenses are broken down into three types in a budget. There are fixed expenses that stay the same every month, variable expenses that change monthly, and periodic expenses which occur once or only a few times per year.

Start your new year right by understanding each expense. This will allow you to allocate your income properly and help you understand your expenses. You will also be able to understand your spending habits better. For example, take a look at your grocery receipts. This is a variable expense that few Americans have much control over during a year of high inflation. However, with some careful analysis, you may find that there are areas where you can save.

Reconsider Subscriptions

As you’re reviewing your expenses, pay close attention to any recurring subscriptions. Which streaming services do you use versus those you don’t? Is there a newspaper you subscribe to that you don’t actively read? Are you a subscriber to multiple subscription boxes?

Jot down any subscriptions you’re not actively using and cancel them to save some extra money. If you don’t want to cancel a service but don’t enjoy its current price tag, consider switching to a less expensive plan with ads.

You can take action to pay off any debt

As you save to meet your financial goals, it’s critical you make a plan to get out of any form of debt. It could be student loans, credit card debts, or both. Consider other financing options such as consolidation and refinancing.

If there aren’t those options available, consider paying off debt through the debt snowball or avalanche method. If you are unsure which method is right for your financial situation, or don’t know how to start paying off debt, a certified financial advisor can help.

You can check your emergency fund.

How is your emergency fund looking right now? You should make it a priority to replenish your emergency fund if you used any of it last year to pay for an immediate expense. It is a good idea to contribute regularly throughout the year to this fund. The more you can set aside into your emergency fund, the more you’ll be able to protect yourself with a financial safety net.

Keep building your savings

Keep putting aside a portion of your income for savings. The general rule of thumb: saving 10% You can start by working from every paycheck and increase gradually as you feel more comfortable.

If possible, request an automatic withdrawal of your checking account to a savings fund. Automating will stop you questioning whether or not you should save money.

Reevaluate Your Budget Tracking Software

Perhaps you are a long-time budgeter and want to review the tools that you use to track your budget. Consider switching to an Excel spreadsheet or a notebook if you find an app not helpful. A budgeting app can simplify your budgeting process.

You should pay attention to your budget year-round

It’s all about life! You may reach your financial goals in 2023, but unexpected circumstances could cause some to fall apart.

If you need to postpone a financial goal or set a new one to reach quickly, give yourself enough flexibility in your budget to ensure you’re able to make these changes.

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This article was originally published on GOBankingRates.com: 8 Budget Tips To Start Your New Year Right