5 "To Dos" That Will Lead You to Financial Peace in the New Year, Part II
It is incredibly difficult to remain financially at peace when the holidays are in full swing. I’m sharing this “to do” list with you with the hope of stacking the odds in your favor. This way, once you’ve completed these tasks, you may enter the new year with clarity and anticipation of good things, instead of that familiar, anti-climactic dread.
Your first task was to identify where you are, financially. If you missed my post on that…STOP here, GO there.
Ok. Welcome back! Here’s your next task.
Create A Budget
I know…just hearing the word “budget” can ignite a chain reaction of negative emotions. Budgets are not meant to be like a straight jacket. They set a framework around your finances so that you can reach your goals. I’d ask you to trust me on this but I’d rather you complete the budget and the rest of my “to dos,” and see for yourself.
Begin by creating a budget for the next month, then try six months. Then, do one for a year, if you’re feeling ambitious…but do what works for you. I like to look at the entire year and put in my big rocks…vacations, conferences, special celebrations. That way, I can prepare by setting aside resources to accommodate my desired future.
This year, my husband and I are celebrating our twentieth wedding anniversary for a complete year. We began in August and will do twenty celebratory activities, some big, some small, to commemorate this milestone. With a full household to maintain, we must have a financial plan of action (a budget) in place to realize our goal.
I’ve attached a budget template that resembles the one I’ve been using since my days as a single lady. I used to use a budget ledger with six columns. The act of writing out my plan for the month and recording the budgeted and actual spending by hand helped me to develop the habit of tracking. It also kept me from living (too far) above my means, which is an easy cycle to fall into when you are learning your money management style. Using the multiple columns allows me to view the budgeted month, week by week. I try to review my financial status on a weekly basis. This helps me to avoid overdrafts or missed payments because I make the necessary adjustments to my accounts during my regular review time. There are times when things get extremely busy in other areas of my life. I have had my share of missteps and have the late fees to show for it. I found one quick way that solves this problem...I take 15 minutes to set up automatic payment of any bills that are due within the next week or so. This provides tremendous peace of mind.
Another great tool to use is a budget percentage recommendation template. This is simply a list of suggested percentages for allocations within your budget. For example, your home rent or mortgage should be between 25%-35% of your income, according to most recommenders. That doesn’t mean that if your home costs more than that, then you should forget the whole budget thing. Set a goal to bring this line item within that range. Again, these are recommendations. Remember: how you structure your budget is up to you, based on your specific needs and goals.
Use the next couple of days to create your budget for the next month. Stay tuned for your next “to do” item on Tuesday.
Until next time…