| Many people set "creating a budget" as a New Year's financial resolution.
Sadly, within a few weeks it's often been forgotten, along with exercising more, giving up smoking or losing weight.
However, for anyone who is serious about getting their financial house in order, creating a budget is the place to start. And January is the best time of the year to draft a budget.
"The new year is a chance to reflect and start fresh," one financial expert said.
No matter what your income is or what your financial situation looks like, budgeting is a big part of being financially healthy. And the key to successful budgeting is knowing where you want to go and then working backwards from there. To be sure, making and sticking to a budget is a key step towards getting a handle on your debt and working toward your various savings goals.
Here are some steps to good budgeting: - Calculate your net income.
- Make a plan and set realistic goals.
- Track your spending.
- Categorize your expenses.
- Adjust your spending to stay on budget.
- Follow the 50/30/20 rule. (Divide your income into three categories: spending 50% on needs, 30% on wants and 20% on savings.)
- Review your budget regularly.
Most people think budgeting is just about restricting their spending so that they'll have that nest egg in their golden years. However, good budgeting is more than that and isn't about limiting yourself.
Budgeting helps you live within your means and reach your financial goals. Of course, you can still leave room for splurges; budgeting is about planning, not being miserable. Making a budget isn't as intimidating as it sounds, and there's no better time to start than now.
For more advice to help you make smart financial decisions, check out CNBC's Financial Advisor Hub and Personal Finance section. |
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