It's not too late to make 2023 the year you finally budget your money.
Many people don't budget their money, or even have an idea of how much they spend month to month on everything from necessities such as housing and food to extras such as concert and sports tickets.
"People turn their blinders on to their spending," said Wayne W. Williams, an associate professor of accounting at Temple University's Fox School of Business. "The digital environment creates convenience, but it does not promote discipline."
Budgeting can help you feel more in control of your finances, boost your savings, and decrease stress. It can even be fun, almost like a game, said Williams, who is also a certified financial planner.
He has tips for creating or refining a monthly budget in ways that will help you stick to it.
Start with a clear head
Before you sit down to make a budget, tackle what Williams calls your personal "don't-want-to-do" list.
Tidy up your home. Clear out the fridge. Organize your office.
When your space is neater, you'll be able to focus better on where you are financially and where you want to be.
"Realistic goals come from clear thinking," Williams said.
Assess what you're working with
Read your pay stub, making sure you know what your net income — how much you're actually putting in your bank account with each paycheck, after taxes and other deductions — is each month.
Organize all your bills, and put them in one place. For some people, reverting to paper billing may be an easier way to keep track of what they owe.
"Now that you have your income and your bills, it is a good idea to go into your bank account and track your spending," Williams said. "What are some of your individual habits?"
"Are you eating out more often?" he added. Are you buying expensive cocktails or sports tickets and paraphernalia when these things are not in your budget?
Buying gifts is another area in which people tend to overspend.
Calculate discretionary spending
Identify your fixed budget items, or the ones that you can't control, such as rent or mortgage payments, utility bills, car or insurance payments, and cellphone bills.
Subtract the total of those expenses from your monthly net income. What is left over is discretionary.
"Discretionary income is the money you have that you can make choices with," Williams said. Those choices "are where we make the most mistakes."
Consider the habits you noticed when assessing your current monthly spending. Then, create realistic goals for how much you want to spend each month on groceries, going out with friends, and any other hobbies or activities that cost money. If you have savings goals, include those, too.
Make small habits
To stick to these goals, you will likely have to change your behavior.
"You can go to the grocery store with a list that you write out," Williams said. "The grocery store is organized to help you spend money, not save money. A list will help you save money."
You may also have to say no to some social events or eat out less often.
"You want to make going out special," Williams said, "and not painful."
Reassess regularly
Just like improving your physical or emotional health, improving your financial health is easier if you assess your progress often.
Don't get discouraged if you fall short one month. Recognize where you went wrong and make a plan to do better next month.
"It's offense and defense," Williams said.
Taking charge offensively may involve asking yourself: "Do I have time to maybe pick up a second job?" Williams said.
"Defense means that you have looked at your spending, so now you can understand the consequence of having lunch [out] maybe four times a week rather than taking your lunch," Williams said.
