How to Stay on Budget in the New Year and Beyond
educating-myself | Read Time: 3 minutes
By Bob Juliano | Published: December 2022
As the clock is winding down on 2022, now is an excellent time to reflect on the year that was and get your finances in order for the year ahead. This past year presented unique challenges for many consumers with inflation soaring and interest rates rising.
A recent WSFS Bank Money Trends study found that nine in 10 people are worried about affording price increases in the next year. This is having a major impact on many consumers’ financial goals, leading to changes in how they spend, save and plan for financial milestones.
Here are tips to help you put a budget and plan in place to overcome obstacles and achieve your goals.
New Year, New Budget
It’s always a good idea to revisit your budget regularly, but with the economic headwinds that have impacted many consumers in 2022, this may be the time to scrutinize your budget closely and possibly even start over from scratch.
A great place to start is by looking at your monthly statements from your various banking, credit card and other accounts in recent months, something that can be done easily through online or mobile banking.
Once you have your statements ready, go through them with a fine tooth comb and categorize your spending into buckets like bills and essentials, delivery and dining out, clothing and accessories.
According to the Money Trends study, many consumers are cutting back, with 56% dining out less and 45% saving more money by reducing non-essential purchases. If you find your budget is stretched too thin or operating in a deficit, adjust the categories you find yourself overspending in as soon as possible.
Pay Down Your Debt
With interest rates soaring in 2022, it is more important than ever to keep a careful watch on the amount of debt you have and are able to take on. Rising rates can impact many things, including credit cards that often times already carry a high interest rate.
Take a close look at your debt and try to pay off as much of it as possible without stretching yourself too thin. The holidays tend to bring increased credit card purchases for many consumers, and while this isn’t inherently a bad thing, it is vital you’re able to pay off your balance as soon as possible to avoid the true cost of those purchases continuing to rise.
If you are unable to pay off all of your balances, consider starting by paying down the highest interest credit card first or consolidating to a card with a 0% promotional rate – just ensure you read the fine print so you know what your terms will be when the promotion ends.
Save for a Rainy Day
The past few years have emphasized the importance of a rainy day fund for emergencies or even just dealing with a rapidly changing economy. If you find yourself with extra income each month, build your nest egg now so you’re financially prepared for the unexpected.
The Money Trends study found 40% of respondents are delaying large purchases like a home, car or furniture. If you find yourself fortunate enough to still have money left over after building your rainy day fund, consider putting it in a higher interest bearing account like a money market to take advantage of elevated interest rates or look toward the future by contributing to an IRA or other retirement account.
One of the most important things on your financial journey is to correct any budget deficits before you find yourself too far in a hole. Saving is lifelong, and revaluating your budget regularly can help you avoid pitfalls and get closer to the finish line of your financial goals.
If you find yourself needing more assistance on your financial journey, consider making an appointment to speak with your banker for a financial checkup and guidance on the products and services best suited to your needs.
About the Author – Robert Juliano
Bob Juliano is Vice President, Director of Corporate Giving & Financial Literacy at WSFS Bank. He is a financial education expert for the Bank and has taught K-12 financial literacy to thousands of children.
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