As we rang in the New Year, it came time for us to put away our growing inventory of Christmas ornaments and decorations to clear out and freshen up our space. It was admittedly sad at first to hide away all the season’s Christmas cheer that brought us so many memories. But once we got going, it was really a nice feeling to clear everything out and start anew. The very next thing that needed clearing up was a review of our finances and setting a new budget. Setting a budget is a great way to start off the year. It can be a bit overwhelming and tedious at first, but once you set your mind to it, you will be glad to see your finances more clearly and with more confidence going into the new year.

In setting a budget, it is important to take into account both the regular expenses and those that come with changes in needs, cost of living adjustments, and new goals. Though it took some effort, we began by reviewing what we earned and spent over the course of last year.

Nowadays, there are many apps available to track your budget that can be linked directly to the bank that sum up and organize all of your transactions over the course of the year into income and expenses. If you are an Excel geek like me, you can also organize all of your bank account, debit card, and credit card transactions in an Excel sheet. Most banks and credit card providers allow you to download all your transactions in an Excel file. You can then put together a list of all the transactions over the course of the year to get an idea of where your money went. And be honest with yourself, as it will help set you up for the rest of the year.

Next, we sat down together and identified the costs that we will carry over into the next year – things like housing expenses, utilities, recurring bills, etc. – you get the idea. We made sure to note all known increases (or decreases where applicable) in recurring expenses.

Once we had all the must-spend expenses budgeted out, we set out to budget all the discretionary expense items such as groceries, shopping, vacations, subscriptions, etc. With a growing toddler, we knew we were going to be increasing the grocery budget as he grows up and needs more food! We were able to get a baseline idea of how much we spent based on previous year spending in those categories and then set a budget for the upcoming year based on our goals for the new year. In your provisions, be sure to also allow for any needed capital purchases or repairs.

Lastly, while it can be exciting to set out a good money-saving budget, it is important to practice discipline and stay the course for the year. As clear as your budget and spending habits may seem at the outset, life happens and it can be difficult to persist. Make sure to set reasonable, attainable goals that help to steward what you have been given well.

“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” Proverbs 13:11