Four Steps to Creating a Family Budget for the New Year

The following is a guest post.

There’s no better time to create a family budget than with the start of a new year. While the holidays at the end of last year may have blown your budget, it’s a rewarding feeling to know you have the chance to start fresh again come January. Here are just a few tips to help you create a family budget that’s sure to help you reach your financial resolutions for the new year.

1. Look back.  Before you actually create this year’s new budget, set aside some time to take a good, hard look backwards before you begin. First, gather last year’s bills, bank statements, credit card summaries and all other documentation that gives you a look at other aspects of how your finances are spent. If you can, gather these financial documents for more than one previous year to find yearly trends. However, what will be most helpful is to sit down with last year’s spending summaries to figure out what will be realistic in terms of moving forward as you create a new budget for the coming year. There are some secure online tools and software, like mint.com, that can automatically load and analyze spending habits from your credit cards and bank accounts to make this process easier.

2. Look at the present. One of the best things you can do for your family in terms of budgeting is be realistic about your spending. It’s one thing to budget low with great hopes of sticking to a slimmer budget in an effort to save, but it’s quite another to actually stick to it. So, be reasonable when setting your budget. For example, if you know that you usually spend $150 a month in gas for your car, then don’t unrealistically set your gas budget at $100 thinking you’ll save $50 a month. Most likely, you’ll consistently go over and the extra $50 a month will have to come out of another line on your budget. So, when you finally do start to form realistic figures for the new year, you’ll know where you can cut back and where you probably cannot. Also consider ways you can cut your budget, like requesting a few new online car insurance quotes to see if you can save money by findingcar insurance discounts that fit your family’s needs.

3. Look forward. As you set your new budget, try to think about other unexpected expenses that may arise in the coming year. For example, maybe you saw that you ended up paying $500 worth of unplanned car repairs throughout the last year. Knowing this total can help you as you plan for the upcoming year. In this scenario, you could start putting aside about $40 a month in order to have a savings just for car repairs, so no flat tires or stalled vehicles leave you unprepared. The goal of a yearly budget is not only to figure out how you spend your monthly income, but also to prepare for all the unexpected expenses that no doubt will arise throughout the next 12 months.

4. Look to the future. Many people think budgets only prepare for the immediate future by helping to plan month-to-month expenses. However, budgets can also help you plan for your long-term future. Whether you are looking to start saving for retirement, your kid’s college education or some other future expense or purchase, if you budget to spend less than you make every month, you’ll have room to save the difference to be used down the road. Short-term financial goals are so important to the financial success of your family, but long-term goals are equally as important as you plan for your future.

Creating a family budget doesn’t have to be a task that leaves you feeling discouraged. When you come to the table with all the information you need and the resolution to stick to it, then you’re sure to successfully reach your family’s financial milestones. Budgeting is just one way to help your family as you all work hard to achieve your goals. So, use the new year as your opportunity to start afresh and full of hope for your family’s financial future.

 Sponsored content was created and provided by Nationwide Insurance.

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