Time to Make Your 2016 Budget: Plan Ahead for the New Year - Cincinnati News, FOX19-WXIX TV

Time to Make Your 2016 Budget: Plan Ahead for the New Year

By Moneytips:

Many people are reconsidering their budget to prevent holiday overspending over the next few months. If you are one of these people, good for you – but why stop there? This is a great time to look further ahead and tackle your 2016 budget.

Lay out your calendar, spreadsheet, or whatever method you use and let’s get to work on next year’s budget. Here are some helpful hints to consider as you dive in.

  • Anticipate Changes – If you have any large changes that you can reasonably anticipate, like a college tuition bill or a new mortgage, incorporate it in your plans as early as possible – even if you do not know what the value will be. Waiting until you know the exact value may not leave you enough time to adjust other expenses.

Don’t forget to incorporate positive changes as well – for example, any anticipated raises.

  • Make Conservative Estimates – When you don’t know the future value of something, make conservative estimates. Shift expenses a bit toward the high side, and income a bit toward the low side. This goes against human nature, but conservative estimates give you a cushion in case things do not go as planned. 

Assume that regular expenses such as groceries, utilities, and gas will continue to rise. Currently, a 2% rise will account for inflation in most daily expenses, but gas and utilities should have a higher anticipated rise because they are so difficult to predict in advance (for both price and usage).

  • Review Previous Results – The year has not ended yet, but by now, you should have a pretty good idea of what goals you are going to meet this year and which ones will fall short. You will know if you need to reduce your spending, increase your savings, cut your debt, or adjust in some other fashion.

This also refers to your means of tracking and allocating your budget. Are you having trouble determining whether you met your financial goals? Do you have to rip up your budget every month and start over? Consider shaking up your budgeting method.

For example, if you are constantly falling short of a savings goal, try using the “bucket” approach. 

Read the full article on Moneytips.com.

Powered by Frankly