My goodness, here we are just a few weeks away from 2013. I don’t know about you but I certainly wonder where this past year went – it seems to have just sped by. With the new year soon arriving, now would be an excellent time to reflect on this year’s budgeting. Do you feel you were 100% successful? Did you create a budget and stick to it through thick and thin? If not, here are some tips that could help with next year’s budgeting.
1. Set aside some cash to have fun. There is research showing that where most people get the maximum amount of pleasure when spending money is on leisure activities such as movie theater tickets, hobbies and vacations. Be sure to set aside some money for those happiness-inducing pleasures of life and you should find it easier to stay within your other budget categories.
2. Determine what you did right and wrong. You can pinpoint your weaknesses if you do a review of what went right and what went wrong this past year. For example, maybe you spent twice as much on plane tickets because you waited too long to buy them. Or maybe you bought gifts that were simply too expensive. Don’t beat yourself up over these mistakes. Learn from them so you’ll make better decisions this year. And be sure to also think about the good decisions you made and what you could learn from them as well.
3. Set a time line. When you feel you need to buy something specific such as a new computer or backpack, give yourself a specific time limit such as a half-hour to make the purchase. You waste time sitting around reviewing a multitude of options when the right decision is probably whatever was your first reaction.
4. Use today’s financial tools. There are some great software tools available that can help you do a better job of managing your money. For example on Mint.com, you can type in your account numbers and immediately see where your money is going. You can then use that information to cut back on some of your spending and save more money. Other online options that can help with money management include Penny Minder, Wasabe.com and You Need a Budget.
5. Create a spending diary. Track your spending by writing down every single thing you spend money on for at least two weeks and be sure to include notes as to why you made the purchases and how you felt about them. This could help you discover leaks in your budget. For example, you might find that you’re spending too much money on coffee and happy hours. Review your list after the two weeks and see what jumps out at you in terms of areas where you could cut your spending.
6. Avoid temptation. If you are on a diet you probably wouldn’t spend the day staring at a big, luscious-looking chocolate cake. So don’t torture yourself by spending time with those catalogs full of right, shiny kitchen gadgets or amazing electronics. Just cancel all of them.
7. Give yourself occasional rewards. Research has shown that diets don’t have much success that force people to exclude almost everything tasty from their meals. This same principle applies to money. If you deny yourself every material pleasure, this turns money and budgeting into a sad subject. Find ways to reward yourself once in a while and your budgeting won’t seem like such a miserable chore.
8. Budget for the year and not just the month. Research has shown that it’s better to budget for the entire year because we tend to feel less confident in estimating our monthly expenses. Also, be sure to add a buffer for unexpected expenses and emergencies.