How To Prepare Your Budget For Next Year- A Cultivated Nest (2024)

How to Set Up Your Budget.

Are you looking at your spending and wishing you had done a better job of staying on track or wished you had saved more? Maybe you just wish you didn’t have as many bills to pay off from Christmas spending? Now that it’s almost new year, it’s time to start thinking about how you want to do things differently. A new year means a fresh opportunity to take control of your finances! For many people, reducing their spending and paying off debt is their number one New Year’s resolution. Having a well planned budget for the year will help you greatly in achieving your financial goals. Read on for some great tips on Preparing Your Budget for Next Year!

How To Prepare Your Budget For Next Year- A Cultivated Nest (1)

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Isn’t it great that we get a fresh start in the new year? Although, really, any time is a good time to figure out a plan for your money!

How To Prepare Your Budget For The New Year

1. Evaluate Your Debts and Bills

Look over the bills you’ve paid in the previous year. Use old bank statements, online banking, or a software program like Quicken to do this. Start a tracking sheet of your choice (computer program, online or on paper) which lists each debt as well as monthly expense, their due date, and the minimum payment. I have a free printable simple budget worksheet here and afree debt snowball tracker available here to help you with this step. You should have a list of all your monthly and annual expenses when you’re finished.

2. Cut Down Your Expenses

Your monthly expenses should be scrutinized before your make your budget for the new year. Are you spending more money on eating out (here are quick meals to make instead of eating out) or groceries than you should? Take a look at50 Things You Can Do To Save Money On Groceriesfor some money saving tips you can use today! Can you ditch cable and use Netflix, Hulu, Roku or one of the many other TV alternatives to stream shows and movies instead? Can you reduce your cell phone bill by changing plans? Maybe you can workout at home instead of paying for a health club membership. Have you called around to get new quotes for car and home insurance? Have you tried menu planning to reduce your grocery costs? Reducing costs will help you create a budget that works better for you and your family. A budget that will help you reach your financial goals!

RELATED: 25 Ways To Save Your Family Money

3. Decide How to Record Your Income and Spending

You need to have a method for budget recording that works for you and your family. It can be an Excel spreadsheet, using a budget binder or signing up for a financial tracker like Mint.com, Every Dollar, or a software program. No matter which you choose, make sure it is something you will keep up to date so money doesn’t go missing, a bill isn’t paid past the due date, and you don’t go negative with your bank accounts.

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4. Create a Budget That is Realistic and Tight.

Once you’ve looked over your past finances and decided what you need to pay for in the upcoming year, start making a budget. It should have a long term plan (how the debt will be paid, how savings will be accrued, etc.) as well as a monthly sheet for your income and the expenses you routinely pay.

5. Start an Emergency Fund for Unforeseen Situations.

Another step in preparing your budget for the new year is to be sure your budget includes money going into an emergency fund. This money should ONLY be used for a true, unexpected circ*mstance. Family illness is an example. Christmas is not! Having $1000 in savings for emergencies will keep you from messing up your budget when you need to spend more money than usual.

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6. Include Sinking Funds

Account for sinking funds, which will help pay for things throughout the year. I wrote a very easy to understand article about how to use sinking funds hereif you’d like more in-depth information.

Sinking funds aren’t something most people create, but they should be! These funds are accrued on a regular basis in order to pay for something they know will need to be paid for in the future.

The holidays are a great example. We all know they occur in December, and that we will want to buy gifts, food, decor, and more. Putting just $20 each payday into a sinking fund for Christmas will give you a nice amount to spend once the holiday arrives.

Or car repairs. All cars need tune-ups and eventually will need tires, etc. Start saving for those expenses now and they won’t be “unexpected” when they happen.

Do you have a budget? If you don’t, now is a good time to gather your information so you can make one and start the New Year off right!

Want to finally get your family’s finances in order?Click here to get our printable watercolor budget binder!With 25+ printables, it has everything you need to get your finances organized today!

If you have a budget, share what method you use in the comments below!

Is it online, a computer program or paper & pencil? I track with a computer program, but do our budget the old school way with pencil and paper using the printable from my budget binder!

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You might also be interested in:Get Out of Debt by Using the Debt Snowball System

How To Prepare Your Budget For Next Year- A Cultivated Nest (2024)

FAQs

How to prepare a budget for next year? ›

How to create a budget
  1. Calculate your net income.
  2. List monthly expenses.
  3. Label fixed and variable expenses.
  4. Determine average monthly costs for each expense.
  5. Make adjustments.

How to prepare your budget? ›

If you're ready to roll up your sleeves and crunch some numbers, here are six steps to get you on your way.
  1. Assess your financial resources. The first step is to calculate how much money you have coming in each month. ...
  2. Determine your expenses. ...
  3. Set goals. ...
  4. Create a plan. ...
  5. Pay yourself first. ...
  6. Track your progress.

What should be considered when setting a budget in EverFi? ›

financial goals, current expenses, and income.

What are the 5 steps of budget preparation? ›

  1. FIVE STEPS TO CREATING A BUDGET. ...
  2. Calculate your monthly income by adding up your paychecks and any other sources of income you receive. ...
  3. • ...
  4. Using a budget worksheet or other tool, document: ...
  5. Goals that are measured are more likely to be achieved.

How to answer an interview question about budgets? ›

When discussing your budgeting experience, focus on your ability to create and manage budgets effectively. Highlight instances where your budgeting skills led to cost savings, improved financial performance, or optimized resource allocation.

What is a good budget plan? ›

In the 50/20/30 budget, 50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants. If you've read the Essentials of Budgeting, you're already familiar with the idea of wants and needs.

What are the 7 steps in good budgeting? ›

Follow these seven steps to start a personal budget that can help you reach your financial goals:
  • Calculate your income. ...
  • Make lists of your expenses. ...
  • Set realistic goals. ...
  • Choose a budgeting strategy. ...
  • Adjust your habits. ...
  • Automate your savings and bills. ...
  • Track your progress.
Oct 11, 2022

When should a budget be prepared? ›

Most businesses start preparing a budget around two to three months before the start of a new financial year. Begin by asking these questions: What are the projected sales for the budget period? Be realistic - if you overestimate, it will cause you problems in the future.

What is the #1 rule of budgeting? ›

Oh My Dollar! From the radio vaults, we bring you a short episode about the #1 most important thing in your budget: your values. You can't avoid looking at your budget without considering your values – no one else's budget will work for you.

What is the most important rule for budgets? ›

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

What should not be included in a budget? ›

Here are five types of income you should never include in your budget.
  • Extra Paychecks. Depending on your pay schedule, some months out of the year will give you an extra paycheck. ...
  • Income Tax Refund. ...
  • Bonuses. ...
  • Side Hustle Income. ...
  • Any Other Income that is Not Permanent.

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

What are the 7 steps in the budget process? ›

Budgeting Basics: 7 Steps to Building Your First Budget
  • Why is Budgeting Important? ...
  • Define Clear Financial Goals. ...
  • Digitalize Your Expense Tracking. ...
  • Calculate Consistent Monthly Income. ...
  • Categorize and Analyze Expenses. ...
  • Craft and Fine-tune Your Budget. ...
  • Regularly Update Your Strategy. ...
  • Prioritize an Emergency Fund.

What is the 30 day rule in budgeting? ›

The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.

How to budget $5000 a month? ›

Consider an individual who takes home $5,000 a month. Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500. 20% to savings and debt repayment = $1,000.

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