How to Start a New Budget for the New Year
5 Ideas for Setting Up a Budget for 2021
Many people mistakenly think that financial success means ever-increasing income. In reality, you can become more financially successful with the money you already have – if you learn how to take control of it and utilize it the right way.
The simplest way to do it? Start budgeting. And there’s no better time to start a new budget than on the cusp of the new year. Make this one New Year’s resolution you won’t skip – start budgeting.
This is how to do it:
1. Do an Overview of Your Expenses
Here are two questions you must ask yourself before you even start drawing up your budget:
1) What did you spend the most money on in the last year?
2) What could be cut?
Obviously, expenses like rent and utilities cannot be cut down on (unless you move – which, maybe it’s worth looking into?), but expenses like groceries, takeout, subscription services can.
Your budget should keep you from spending money on stuff like extra food that will go bad in the fridge, ordering takeout when you could cook for yourself, and spending money on HBO when you only got it for Game of Thrones in the first place. Declutter your spending before setting up your new budget.
2. Set Your Goals
What is it that you want to achieve with the money you have? This is the stage you decide how to divide your money in a way that allows you to comfortably achieve your goals for the year. It should include both serious stuff (like sinking funds for car maintenance and home repairs) and fun activities (vacations, family activities), as well as more long-term goals (savings, contribution to your IRA, etc.)
Basically, you take the income you’re working with – and divide it into categories for each payday. You take care of stuff like rent, utilities, and groceries first, and then move onto other goals depending on your priorities. The more ground you cover at the beginning of the year, the less you’ll have to scramble and re-adjust the budget later.
3. Start an Emergency Fund
But whatever your priorities are the first and foremost should be setting up your emergency fund. This is what should save you down the line if you’re hit by a big unexpected expense that cannot be solely covered by the sinking fund.
We’d recommend the emergency fund be enough to comfortably cover at least a month of your expenses. But most would say they consider themselves “safe” when the fund is enough to cover at least 3 and optimally 6 months of expenses – so that’s what you should aim for in the long run (in which case the funding process will likely last for more than just next year).
4. Leave a Wiggle Room
Don’t make your budget too rigid. This is where most budget-makers fail – they blow holes in their too-rigid budgets and decide it’s not for them. The thing is, you can’t change your spending habits overnight, even if you know where you’re making the mistake. If you spend $600 on groceries monthly, it’s unrealistic to expect yourself to cut down to $250 from the get-go – even if it’s doable.
Work to align your spending habits with what you can afford, but try to find the middle ground you know you can work with.
5. Have a Plan B
Financial emergencies can be tough – especially if your emergency fund isn’t fully funded yet. This is the kind of thing that derails the budget and derails it fast.
Know your options: where and how can you get emergency cash fast? There are multiple options, some easier and quicker than others. For example, if you’re a car owner you could try taking out a title loan.
Use Title Loans for Fast Emergency Funds
Why Title Loans?
Title loans are quick, easy, and accessible. They’re a secured type of loan (your car acts as collateral), which allows the lenders to work more freely. Title loans accommodate any type of income, and care little about credit scores, as long as you satisfy the few requirements they have: you must be at least 18, own a car, and have that car’s title be in your name and lien-free – that’s it.
How Do I Find Tennessee Title Loans Near Me?
- Go to the Tennessee Title Loan homepage and fill out the application form.
- You’ll be contacted by the loan representative from the nearest location who will set up a meeting.
- You will take your car to that location at an agreed-upon time.
- The loan representative will examine your car and check your documents (you’ll have to provide a valid ID to prove you’re of legal age and it’s your name on the car’s title).
- You get approved and get the cash.
As long as your documents are in order, the entire application-approval process will last only around 30 to 45 minutes – and you’ll get your cash (up to $2,500 depending on your car’s condition) the very same day.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.