5 Ways to a Budget
Better in 2016
HERE ARE FIVE WAYS TO GET STARTED.
Don’t let an
end-of-year
spending spree
leave you with a
bill hangover in
January.
Before New
Year’s Day rolls
around, resolve
to budget your
money better in
2016.
1. Review last year’s expenses —and predict this year’s.
Take a look back at your 2015 expenses to see where you overspent and where you
should be spending more —savings, for example.
Reviewing last year’s expenses might help you predict spending for next year. You
can be ready for bills that don’t come every month, such as your annual car insurance
premium, and plan to tighten your budget when those are due.
2. Track daily spending.
Credit cards and automatic payments make it easy to spend money without much
thought. To get a better handle on your finances, it’s helpful to keep an eye on what
you spend every day. You can write expenses down in a notebook, or use a budgeting
app, such as Mint or You Need a Budget, to track spending on your smartphone.
3. Use the envelope system.
If money is really tight, try a system your grandparents used: Label an envelope with
each of your major expenses: rent, food, clothing, entertainment, utilities —including
your cell phone —and savings. Then allocate the cash for each expense into its
envelope and see what you have left over.
If you want to go digital, MVelopes is an app that automates this method.
4. Find ways to cut your spending.
Consider skipping the daily latte or packing your lunch instead of buying it. Cutting
back on dining out and trips to the movies can allow you to put more money toward
bills.
5. Make saving automatic.
A good rule of thumb is to save 10% of your paycheck, but you can adjust that
amount based on your budget. Having a portion of each paycheck automatically
deposited into your savings account makes it easier.
Because interest rates are currently so low, you should shop around for a savings
account. Credit unions, such as First Heritage Federal Credit Union, offer a variety of
savings accounts, usually with higher rates than banks offer.
Start the new year right by looking at the big picture of your finances and make a plan
to budget better in 2016.
—Ellen Cannon, NerdWallet
© Copyright 2015 NerdWallet, Inc. All Rights Reserved