Setting Up a Budget for 2014


Six years ago this month, my husband and I started living by a written budget, and it changed our lives. Since the time of taking that primary step of financial discipline, we have become debt-free (excluding our mortgage), enabling ourselves to be investing in the future instead of paying for the past.

Perhaps at this year-end, you, too, find yourself ready to make a financial change.

Here are 7 steps to setting up a budget for 2014.

1. Look at your 2013 spending.

This step is about reality. Where did your money go in 2013? Look at each category of expenditures. How much did you spend on food every month? What about clothing? What percentage of your income did you give? How much did you save? Assess these real numbers and let them form a baseline for you as you create your 2014 budget.

2. Consider your financial goals.

What do you want to accomplish with your money in 2014? Perhaps you’d like to pay off some debt, save for a down payment on a new home or for that new appliance package your kitchen is screaming for, begin funding your retirement account or your kids’ college savings, set aside money for your next family vacation or for that shopping weekend you and your girlfriends have been dreaming about, or maybe you’d like to lessen the blow of next Christmas’s shopping by saving for it all year long.

3. Utilize a budget tool.

Find a budgeting software or app that works for you, or open Excel and start from scratch. Customize your budget categories within the areas of giving, saving, and spending, and assign a percentage or an amount to each category. Every dollar of income should be accounted for somewhere — leave nothing unassigned.

For more on how we give, save, and spend, see here.

4. Plan to “stick to it.”

If it’s true that “New Year’s resolutions are meant to be broken,” then don’t consider your new budget a “New Year’s resolution.” Financial success is a journey that requires continual steps in the right direction, and a written budget is the vehicle that can take you there… if you stick around for the ride. For the married person, view your spouse as your teammate and accountability partner, and work together as you make the budget work for you.

5. Stay inspired.

Living by a budget is a forward-thinking process. Instead of focusing on the sacrifices you may have to make now, consider the freedom you’ll find later. A vacation saved for and paid in-full is much more relaxing than one charged to the card, and a paid-off debt will be much more satisfying than this week’s extra meal out. Keep your eyes on your goals, but also allow yourself some flex along the way.

6. Consult financial experts as needed.

You may find it worthwhile to sit down with a financial planner as you work out scenarios for long-term plans such as saving for retirement or funding your child’s college education. You may need to make an appointment with your insurance agent to reevaluate your life insurance policies, especially as your family grows or your life situation changes. Or you may simply need to connect with resources from the likes of Dave Ramsey or the Get Rich Slowly blog for day-to-day financial tips and inspiration. Utilize the financial expertise of others to equip yourself for financial success.

We had to opportunity to meet financial guru Dave Ramsey this past summer during our doing-it-without-debt vacation!
We had to opportunity to meet financial guru Dave Ramsey this past summer during our doing-it-without-debt vacation!

7. Do what works for you.

Ultimately, a financial plan is only useful to the degree it works for you. Borrow inspiration and budgeting ideas from the “experts,” but tailor them to fit your family’s needs and goals.



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