What is better than holiday parties, presents, and delicious food? 2015 budget reconciliation time! Not too many people get excited at the end of the year to see how much they have saved, but I sure do. I go over all my expenses, income, investments, and mortgage to see how much I made and spent.
If you don't know where the money is going or how it is coming in, how will you change your spending habits for the better? This is the time to see where to cut next year to save for something that you really want.
The quick and dirty way is to input all of your information into Mint.com. There is an amazing program that is super easy to use. It populates all of your credit cards, bank statements, and investment accounts right off your online banking and lets you review them in one single program. It shows you your spending trends for the last year. You can set goals and it tracks your progress.
I think that if I can simply save 10 per cent from each category, I can do all kinds of things with the money next year to make my life better.
If you want to go over your statements the old fashioned way, you can do that too. Just grab your bank statements and credit card statements with some eggnog (spiked) and get ready for a ripping evening.
I look at cash from ATMs, bank fees, restaurants, clothing, and miscellaneous spending. When you see the amount you've spent I bet you'll be shocked at how much money goes into these areas. I think that if I can simply save 10 per cent from each category, I can do all kinds of things with the money next year to make my life better. Maybe it will go towards a creative outlet, a night course, or socked away for retirement. Those savings can go towards something that would make me happy, or invested to give me peace of mind.
I never get caught up in guilt when I see what a drunken sailor I've been at bars. Instead, I remember the great times I had spending it with friends. But then I think about how even happier I would be if some of that money went towards an investment or an amazing trip with my family. That will motivate me to hunker down on my spending and encourage me to save more than last year by moving me toward my preferred future.
There is no point tearing out my hair when the money is gone. I made the right decision at the time to buy that sweater or go away for the weekend, and I will feel good about the money I save next year moving forward.
This is your chance to decide where you want your money to go. Look at the pie graph of what categories got the most money and then design your own budget for 2016 with where you'd rather the money go. If you spend a ton on clothing and it isn't really giving you the bang for your buck that you want for your life -- transfer some money to travel from that category.
If you have zero money going into savings then shave off 10 per cent from everything else and make sure you're saving at least 10 per cent of your take home money for your golden years. Set them in a budget and then get everything you want next year.
Hard-nosed budgets never really work for people like me with a strong sense of freedom, but limiting my variable expenses does. Think of how much you really want to have saved for next year, what trips you want to take, prioritize what you want to buy for yourself, and then look forward to next years budget reconciliation and congratulate yourself on keeping to your plan.
Have a fabulous holiday,
Dave