As we begin another year, it’s time to create your financial goals and household budget for 2019.

Do you have enough income to live comfortably within your means? What are you saving for or paying off? Are you on track with your monthly household budget? Do you even have a budget?

Here are some helpful tips and worksheets to get you headed in the right direction with your 2019 finances.

For those of you new to budgeting, this will give you a clear picture of where you are financially regarding your income vs. expenses. For those of you who already have a budget, this is a reminder to revisit the numbers and make sure they are still accurate. If there have been changes to your income or expenses, now is a good time to revise your budget.

Budgeting 101

One of the best ways to stay on track with your financial goals this year is to create a household budget. If you don’t have one, you need one – now. It is like a best friend that wants to help you become debt free and achieve financial freedom. Listen to what it “says,” and you will know what you need to do in order to live comfortably within your means. It’s one powerful piece of paper!

A basic budget shows you how much money is coming in, how it’s being spent and how much you have left over at the end of the month (and hopefully you have some left over). Developing a budget is serious business, and a workable, realistic budget is the key to helping you meet your financial goals.

Be prepared to sit down with your financial records, a pencil, a calculator, some scrap paper and possibly plenty of chocolate (trust me, you’ll need it). Feel free to work on part of the budget one evening and finish the next night. Creating a budget can take a couple hours, but it doesn’t have to happen in one long marathon session.

To develop your household budget, follow these steps:

1. Start by printing the Budget Worksheet.

2. Look over the worksheet categories and amend them to fit your income and expenses. Add and delete categories as they apply to your specific earnings and spending habits.

3. Calculate your average monthly income including net employment income, spouse’s income and all other sources of income.

4. Use your checkbook, bills and receipts for the last two to three months to average how much you are actually spending per month on the budget categories listed.

5. For expenses that occur more or less often than monthly, convert the annual amount to a monthly figure when calculating the monthly budget amount. For instance, if your homeowner’s insurance is paid yearly, divide that annual cost by 12 to obtain the monthly amount.

6. Total the income category and total the expenses category.

7. Subtract the total expenses from the total income to calculate your net income (Income – Expenses = Net Income)

8. If your Net Income is a positive number, good for you! This means that you have money left over at the end of the month after your expenses have been paid. Apply any extra money to paying off debt and increasing your savings. Remember that extra money left in a checking account tends to be spent.

9. If your Net Income is a negative number, then your expenses equal more than your income and it is time to make some immediate adjustments in your spending. You are living beyond your means and it is time to apply some frugal living techniques right away.

10. Review and update your budget quarterly (or at least every 6 months) to see if any changes need to be made and to ensure that you are staying on track. I know that sounds like a lot of updating, but you can see at a quick glance if anything has changed in the categories and make changes as needed. Your budget will let you know right away if you are spending more than you should. “Listen” to it carefully and heed its warning if you are spending too much.

11. Once you have completed your budget, it is time to record your daily expenditures in order to determine where you can cut expenses and control total spending. Track your expenses, every day, for everything you spend in a month (minimum of 2 weeks). I know this sounds like an incredibly tedious project (and it is), but it works – I promise. At the end of the month, you will have a crystal clear picture of where your money REALLY goes and what non-essential expenses you can cut immediately to get to a positive net income.

Setting Financial Goals

* Use a Financial Goals Worksheet like the one from thebalanceeveryday.com. List your short-term, medium-term and long-term goals. This worksheet will help you determine how much you need to save each week/month in order to meet your financial goals by the specified period of time.

* List your goals on the worksheet. Make sure you work with your spouse to set the goals so you are both on the same page when it comes to spending and saving.

* Determine how much you will need to set aside each week to reach each goal in a specific amount of time.

* Amend your household budget to include the amounts for the goals.

* Post your goals in an easy to see location to keep you motivated and on track.

* Review your goals on a monthly or quarterly bases to make sure you are still on track. If you find that you are not meeting some of your goals, you may need to change your spending habits or amend the worksheet. Life happens and sometimes you may not reach a goal when planned. The key is to keep working towards the goal.

You have now made it through the eye-opening world of budgeting and should have a much better idea of where you stand financially. Continue to update your budget, especially as your expenses drop and you live more frugally. Here’s to a fabulous, frugal and debt-free year!