New Year New Budget

The new year has started but has your budget? With the holidays in the past, now is an exciting time to set some goals and review your budget for 2025. Grab a pen/pencil and some paper or use your smartphone notes app and let’s get to it!

Reflect on 2024

Take a moment to reflect on your finances for 2024. Look for positive and negative trends. Reflection is a powerful tool to review your budget for the upcoming year.

reflection of an eye — Reflect on the previous year.

Examples: Did I pay off a credit card? Did I have leftover money each month? Did I use my credit card too much?

Setting Goals the SMART Way

Start with an initial goal about your finances and then change or define them after reviewing your budget. Goals are not set in stone but are a tool to help guide you. An example of an initial goal is to save money to buy a car.

After creating your budget change your initial goals to make them SMART. Use the acronym SMART —Specific, Measurable, Attainable, Relevant, and Timely. An example is, starting in January, I will save $130 each paycheck to use as a down payment to buy a vehicle by my birthday in June.

What is your income?

Gather your paycheck(s) and find the net pay. If you have multiple paychecks (or multiple people are budgeting together), then you need to add the net pay of all checks. Sometimes this is not listed as net – it may be listed under deposits, or total check. Basically, you need the amount that is going into your bank account(s).

What are your expenses?

Next, list all the items you spend money on. There are two types of expenses to focus on – fixed and variable. Fixed expenses include items that do not change in price often, examples include mortgage/rent, childcare, phone, car, subscriptions. Variable expenses change based on the amount you use them and can often be estimated based on the amounts spent, examples include water, electricity, groceries, gas.

piggy bank with money for expenses — Budget your expenses – include an expense for discretionary spending.

Now, take a moment to look at your previous bank statements to see everywhere you swiped your card(s). Look at the past three months to help you find other expenses that may occur quarterly throughout the year – while you may not add this one to a typical month it is important to budget for it. Finally, after the expenses for a month are listed, find the total amount by adding together all the monthly expenses.

Income – Expenses = Leftovers?

Now, income minus expenses equals “leftovers.” An amount of zero means you are spending exactly the amount you make. Positive leftovers mean you have additional money you can save or spend on other expenses you may not have accounted for, whereas a negative leftover means you are spending more than you earn. Afterwards revisit your initial goals and change them into SMART Goals according to what you have left in your budget. Consider saving more amounts, lowering discretionary expenses, or paying more towards debts.

person giving a thumbs up for completing the budget — Way to go – your budget for 2025 is now complete! Photo by Johan Godínez on Unsplash

Follow Through

You did it! Your goals are set, and your budget is planned. Now, set time aside monthly to reflect on your budget and make changes as needed. Budgeting this way may not be your style – check with your bank to see if they offer a free budgeting tool that is connected to your account(s)!

If you want to learn more about budgeting, paying off debt, setting goals or you have other financial questions then please feel free to reach out to Josey via phone 772-462-1895 or email her at josey.keener@ufl.edu.

Resources:

Easterly, R. (Tre). (2024). Designing Instruction to Guide Reflection: AEC798/WC459, 5/2024. EDIS, 2024(4). https://doi.org/10.32473/edis-wc459-2024
Torres, N. I., Turner, J., & Williams, B. C. (2012). Building a Spending Plan: Step 1 – What Are Your Goals? FCS7167/HE821, rev. 7/2012. EDIS, 2012(8). https://doi.org/10.32473/edis-he821-2012