How Budgeting Can Transform Your Finances in 2016 [Blog Post]
January 5, 2016 - By: SC&H Group
The following blog post from Amanda Wooddell Wilhelm, a Principal at SC&H Group, discusses how the right budgeting plan can help jump start your financial transformation in 2016.
New Year’s resolutions focus on change to achieve an end goal. Resolutions are designed to kick old habits, inspire transformation, and promote new beginnings. The individual steps necessary to achieve this end goal create a path to happiness and prosperity.
A popular resolution is to improve finances. This could mean different things to various individuals, such as increasing savings, eliminating debt, or enhancing future investments. Regardless of what your individual financial resolution may be, the most important step towards financial transformation in 2016 starts with the right budgeting plan.
Budgeting is an essential component of sound financial management, but is often an overlooked area. Budgeting takes discipline, as do most New Year’s resolutions. However, the process of creating and maintaining a budget doesn’t have to be complex, and the habit of sticking to a budget can easily become a routine practice.
Make your financial New Year’s Resolution a success through budgeting. Here are ten tips for starting – and sticking to – a budget in 2016:
- Understand The True Purpose of A Budget: There is one fundamental reason for budgeting, which is to help you spend less than you earn. Spending less, and spending wisely, will help you attain your personal finance goals.
- Have Long-Term Personal Financial Goals: What are your personal finance goals? Whether it’s to become debt-free, buy a house, or retire early, you should always have a long-term goal in mind.
- Know How Much You Make: Knowing exactly how much money you bring in each month – after taxes – is a critical foundation for budgeting.
- Have Accurate Spending Data: Compile all of your bills and expenses from the past two months to allow for complete clarity on your spending habits.
- Start with a Pencil and Paper: At first, personal financial planning software can be overwhelming to use. There’s nothing wrong with going back to the basics and starting the process with good old-fashioned pencil and paper.
- Be Realistic: Budgeting is much like dieting and exercise. Be realistic about your goals and expectations to see the best outcomes.
- Set Short-Term Goals: Set some short-term goals that will allow you to experience a sense of early progress. This positive reinforcement will ultimately make the habit of budgeting stick.
- Have Support from a Partner: Whether you are married or live with your significant other, be sure to gain the support from another person – especially someone whose life will be impacted by this effort.
- Be Willing to Adjust: Early on, you may find some parts of budgeting aren’t right for you. Don’t be afraid to make critical adjustments early on in the process.
- Be Good to Yourself: Don’t be too hard on yourself, and always find ways to enjoy your life and loved ones. This will help the habit of budgeting truly stick for the long-term.
Budgeting is one New Year’s resolution that will truly transform your life. By getting started, you are taking the steps required to achieve personal financial freedom, which will create a path to long-term happiness and prosperity.
This is an achievable goal for everyone.
If you like to would like to learn more about how to create and maintain a budget that helps lead to long-term financial freedom, we welcome you to contact Amanda here.