When it comes to sticking with that budget you created in January, are you like Bon Jovi and living on a prayer?
Like their popular song says, we’re halfway there — through the year, that is — and things happen that can make staying on track difficult. Between medical emergencies, unexpected car repairs and other unplanned expenses, it’s easy to lose sight of the goals you set for yourself at the start of the new year.
Here are a few tips to help you align your priorities with your saving and spending habits. Following these can help you stick to your budget for the rest of the year and hit those all-important savings goals.
Confirm your goals.
Ask yourself why you created your budget in the first place. Are you saving for a new car, a house or retirement? Have those goals changed since January? Whatever your goals are, be as specific as possible. Set reasonable and achievable savings targets for each goal so you know what you’re aiming for each month. As the old saying goes, “what gets measured gets managed.”
Make a list, check it twice.
Now that you’ve confirmed your goals, review both of your budgets — the one you created in January and what you’re spending money on now. At a minimum, your new list should include:
- Rent or a monthly mortgage
- Utilities such as your phone, cable and internet
- Expenses like eating out
Now, compare the two lists. What’s different? Any new bills you didn’t have at the beginning of the year? Have your habits changed? For example, are you eating out four nights a week instead of three?
Once you know what’s changed, determine what you need to adjust to get your budget back on track. That means prioritizing everything you’re spending your money on. Start with what’s most important and move down the list.
Get out the scissors … figuratively.
Look at your other bills to see if there’s an opportunity to cut expenses. A good place to start is with your cable and internet payments. Your provider may lower monthly rates through an adjusted service package. The same goes with your credit card companies. Renegotiated interest rates could mean reduced monthly payments.
Prepare for your taxes.
While you’re reviewing your monthly bills, check your tax elections to make sure you’re paying the right amount. This is especially important if your salary has changed since January. Making necessary changes now could save you money when your tax bill is due later.
Put your extra savings to use.
Now that your budget’s on track, what will you do with your extra savings? It depends on your goals, but you could contribute more to your employer-sponsored retirement plan, if you have one. You could also start an emergency fund.
To quote Bon Jovi once again, “We’ve got to hold on to what we’ve got” — and that includes our hard-earned money. Take time this summer to revisit your budget and see where you may need to adjust. Your finances are too important to be living on a prayer. They deserve Bon Jovi-like rock star status.