At the beginning of each year I create a spreadsheet with how much I spend and make during the year. This helps me to identify where I can cut my spending at the end of each year. Sometimes you cannot always cut your spending because surprises happen. For example, you may need to buy a new car if your old car breaks down. In that case I would subtract this expense at the end of the year since I know I will not have this expense the following year (at least I shouldn’t). Then with the new car accounted for, I have a rough idea of what I should expect to spend next year.
Another tip is not to worry too much where you were this time last year. You will have different expenses each year at different times of the year. However, I am not saying that you should totally ignore it. If it’s a minor difference, you are fine, but if you are off by a lot of money, then you should pay more attention to what you are spending.
As mentioned before, I create a spreadsheet at the beginning of each year. The spreadsheet does not have to be very fancy or complicated. The spreadsheet I make for my personal finances is simple. I have a column for the amount spent, the date, and a short description. In addition, I have a column designated for the money I made during the year that follows the same set up. The last column calculates the profit for the year. Here is an example below:
As you can see, budgeting does not have to be complex. Budgeting is something that anyone can and should do. I am not an accounting major by any means, but budgeting my finances and MAP’s is simple. The most important thing to remember is to constantly update your spreadsheet and remember that money is not infinite.