4 Ways to Reset Your Budget in 2016

It’s the time of year when gym parking lots are full and healthy cookbooks are on every endcap at the grocery store. January is a natural time for people to hit reset on their habits, in hopes of developing more healthy ones. Usually, it’s related to losing weight or eating better. But your wallet might be another place that could use a reset.

A recent financial report found that a massive number of Americans are living paycheck to paycheck, and an unexpected bill of only $500 would be enough to send them into a tailspin. If that hits a little too close to home for you, consider going on a spending *fast* for 30 days. MPR describes the rules as thus:

  • You can spend money on things you need and bills you already have (groceries, utilities, other payments)
  • You cannot purchase things you don’t need (clothes shopping, eating out, etc)

Like a diet, it’s hard at first, but drives you to be more resourceful by cutting out conspicuous consumption. It takes 30 days for habits to form, so even though it’s unlikely that you’ll give up all frivolous spending, maybe one or two habits, like making coffee at home before work, will stick. Try a few of the ideas below to help build new habits:

1. Make a budget

Rule one of improving finances is always the same: figure out how much you *have* to spend each month, how much you want to save, and guidelines for what’s left. Check out your bank’s online options, or use a budget tool to track what you spend, and where. If you already use one of these tools, compare your spending before your financial fast and during.

2. Go cash only or card only

Many financial sites for budgeting recommend using cash instead of plastic for spending, but some are so used to swiping that cash just feels like extra money to burn. Pick a method that forces you to reconsider your budget in whatever way makes sense to you.

3. Pick your indulgences

Post-fast you’ll know that getting your nails done or stopping by Starbucks everyday is 100% worth the money to you, but that other things, like eating out every day, are not.

4. Assess why you’re spending

Why are you spending money on things that you don’t need? Post fast, you’ll not only know which indulgences are important to you, but also question why others are so important.

 

Are any of your New Year’s resolutions related to finances?