We’re approaching the time of year where the holiday cheer will slowly diminish and the new year will ring in and give you a confidence to tackle anything. But soon after, your holiday spending will be looming over you and you’ll be left scrambling to make payments. Don’t worry, we’ve got a New Years’ Resolution for you… create a spending plan.
When initially creating a spending plan, it may be hard to find a place to start, but trust us, it’s a resolution that will payoff in the future. We’re going to walk you through the simple steps of how to start allocating your money and working towards a secure financial future.
Step 1 – Decipher your monthly household income.
This includes any steady money that you are receiving each month, including: salary, pension, and a spouse’s income, if you’re married.
Step 2 – List out your monthly expenses.
There are two types of expenses to be aware of: fixed and flexible. Fixed expenses are debts that do not change from month-to-month (e.g. mortgage, rent, credit card payments, student loans, etc.). Flexible expenses can vary between months (e.g. groceries, entertainments, gifts, etc.), but are an important part of your budget.
Step 3 – Do the math!
Add up your income and expenses. Then, subtract your total expenses from your total income. If you get a positive result, then keep doing what you’re doing! However, if your result is negative, then make adjustments to your flexible income.
The most important aspect of creating a spending plan to remember is that it takes time. Like any resolution made at the beginning of a new year, stick with it and make it a routine.
If you have any questions or would like help with setting up, or managing, your spending plan, contact us!