It’s that time of the year where we struggle to remember what day of the week it is. When we start to reflect on the last year and try to get into a state of readiness for the new year.

With this also being a new decade, it’s just the right time to start the ball rolling with new dreams, targets and goals. If having a better control over your finances are included in those goals, then continue reading.

It has been long proven that one of the keys to success is preparation. If at this point in time you are not fully prepared, no need to panic, you still have some time to get going. If you are unsure how to get going I have put together some tips on how to put together a budget and stay on track in the new year.

“By failing to prepare, you are preparing to fail” – Benjamin Franklin

If you are trying to save 20% of your salary, take your family on a vacation, save for a deposit on a home, get out of debt or just to have better control of your finances, then setting a budget for the year and holding yourself accountable is the best way to achieve those objectives.

How to achieve a realistic budget?

1. Determine your currently monthly income and expense
2. Quantify your additional yearly expenses for example insurance, annual holiday, house maintenance, special occasions (Christmas), gifts  
3. Set an emergency fund amount (something will come up)
4. Quantify and set your finance goals (save $20k, invest $5k)
5. Adjust as necessary

SCENARIOS:

1.What if I don’t know what my revenue will be as I am self employed, currently unemployed or work by commission?

I would suggest you start with your expenses as you can use past data to compile, then contemplate on the life you want to live in 2020, that is, do you want to take a family holiday, a personal development class, enjoy a monthly meal out etc and use those expenses as your base point. 

Based on this information, you will then see how much revenue you need to earn to accomplish that. Then, flag those expenses that you will not commit to unless you have earned that revenue (those are your variable expenses). In others words, do not spend outside of basic living expenses unless you have earned.

2. I have no clue what my current expenses are?

Examine your bank and credit card statements for the last six (6) months and this should give a starting point for what you are spending. Use the template provided to get an idea of the basic categories you are seeking the data for. 

Update the template as you gain more reliable information. It may take some time before you have a realistic budget but in time it will be more and more accurate.

3. What is the best way to budget for the one off-expenses?

I would suggest taking the total and allocate over the full twelve month period, that would ensure the amount is factored into the total yearly budget. 

Another method would be to allocate the cost to the month in which it will be incurred, that is the car insurance is due in September, the total expense goes in the month of September. The last method helps with cash flow projections.

Hopefully, this short article and templates helps on your quest to take control of your finances for the new year or encourages you to take a look at your current budget with hope of improving it. 

Few things to remember:

• A budget is a working document and you will need to update as more reliable information comes to hand. 
• Monitor your cash purchases as it’s harder to capture those expenses.
• You will need to formulate a process to capture your actual expenses, this can be done by using a budget template and save as an actual version or you can download an app to help.

If you are new to budgeting it can disheartening at times, it is not meant to be a restrictive process but a tool to keep you in control of your finances.

Happy Budgeting!!