Have your finances been derailed in the past year? Are you ready to get them back on track? It's never too late to begin again, but those who succeed do so with a clear plan. In the finance world, we call that a budget.
While the thought of planning an annual budget can be overwhelming if you've never done it before, this article will walk you through it step-by-step. In no time at all, you'll be back in control of your financial future.
Why You Should Have an Annual Budget
Preparing an annual budget is a foundational element of your financial success. By keeping track of your income and expenses, you'll have a more accurate understanding of your current financial situation, and you'll be able to see more clearly any changes you need to make to achieve your financial goals.
How to Prepare an Annual Budget
Annual budget preparation may seem intimidating, but it doesn't have to be. By following these simple steps, you'll be rocking your personal annual budget in no time.
Know How Much You Make
The first step in creating an annual budget is to know how much income you have access to. If you work more than one job or your partner contributes to household expenses, you need to add all those numbers into your budget. You can find this information on your bank statements and check stubs.
Keep Track of Your Spending
Most people spend more than they realize on small, insignificant purchases. Eating out, sodas at the convenience store and coffees on the way to work can add up and wreck your budget. Look at your bank statements and credit card receipts to get a more accurate understanding of how you've been spending your money.
What personal financial goals would you like to achieve this year? You can't make it successfully to a destination if you don't know where you're going. Consider your goals when deciding how to spend your money.
You're 50% more likely to achieve your goals when they're written down, so be sure to write your budget out on paper or use an annual budget template online to keep track of income and expenses clearly.
Hold Regular Check-Ins
Because your financial situation may change throughout the year, you may get a raise or get married-you should hold regular check-ins to make sure you're still on track to achieve your financial goals. A quarterly check-in is good, but monthly is better.
Have a Back-Up Plan
Now that you know how to calculate an annual budget, you've made an important first step toward accomplishing your financial goals. However, there may be times that unexpected expenses arise to bust your budget. What will you do in such a situation?
When unexpected expenses arise, Thinkflow’s Income Helper can assist with finding the right side hustle that will help you stick with your annual budget.