With the new year closing in, now’s the time to review your budget over the past year. This allows you to determine what’s working, what’s not, and what types of changes you need to make in the months to come.
There’s a good chance that a budget review will lead you to make various changes. That’s why it’s so important to conduct a review before the new year arrives. Here are some of the questions you should set out to answer.
1. Has your income or expenses changed greatly over the past 12 months?
You can expect minor fluctuations in your income and expenses. What you’re looking for is major changes over the past 12 months, such as the result of buying a new home or motor vehicle.
2. Do you foresee any large purchases in the new year? Have you planned for these?
This can take on many forms. Examples include a home renovation project, a wedding, or a vacation.
Don’t focus on small expenses. Look for those that have the potential to greatly impact your budget. These are the types that you want to plan for as far in advance as possible.
3. How stable is your income?
You hope that your employment is steady, but times are tough and it’s hard to escape news of recent layoffs across the world.
4. What areas of your budget can you trim?
Review your budget to pinpoint two or three areas of your budget that you can trim. Can you cut your cable bill? Can you negotiate a better rate with your home insurance company? Can you eat out less?
A few dollars here and there can really add up over the course of a year.
5. Are there any other ways to generate income?
If you’re not satisfied with your primary source of income, consider other ways to earn money. A side hustle could be just what you need to bring stability to your budget. Furthermore, this could lead you down a better career path in the future.
A new year means a new budget. It also means that you need to answer key questions such as those above. Doing so will position you for a financially successful 2023.
When was the last time you reviewed your budget? Do you plan on doing so again before the new year arrives?