8 Ways To Make a Budget You Can Keep in 2024
Written by
Cindy Lamothe
Edited by
Ashleigh Ray
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A new year always inspires a new mindset — especially when it comes to setting financial goals.
Maybe you’re wanting to begin saving for retirement, putting money aside for a large milestone, or simply straighten out your finances once and for all. When it comes to budgeting for 2024, Anjali Pradhan, Certified Financial Advisor (CFA) and founder of Dahlia Wealth, recommends zooming out and looking at the big picture.
“I suggest to my clients to know their financial ‘Why’. Most budgeting attempts fail because people lose motivation when things get tough. Knowing why you are budgeting makes something that would otherwise be seen as a sacrifice, instead as a step towards your ideal life.”
According to Pradhan, the ‘why’ should be happy and joyful. It shouldn’t be paying off debt.
“For example, my financial ‘why’ is saving for a cottage,” she pointed out. “When I have to forgo buying something, I think about the joy I’ll have with my friends and family over the campfire. It then doesn’t feel as difficult or sad. It’s part of the plan and needs to be done in order to reach my goal.”
Here are some more ways you can make a budget you’ll stick to in the new year.
Analyze Last Year’s Financial Performance
Being intentional goes a long way, experts say. Before you start setting your financial resolutions for the new year, Linda Chavez, founder and CEO of Seniors Life Insurance Finder suggests taking some time to analyze your previous year’s financial performance.
“Look at where you spent the most money and identify areas where you could have saved more,” she advised. “This will help you understand your spending habits and give you a good starting point when creating a budget for the upcoming year.”
Set Realistic Goals
One of the most important components of creating a practical budget for 2024, according to Jake Hill, CEO of DebtHammer Consolidation, involves setting realistic financial goals based on your salary.
“Aiming to save $1000 a month is great if you can afford it, but that goal will quickly demotivate you if it isn’t realistic,” he explained.
Hill notes that even more important than setting realistic savings goals is implementing spending limits that can help you maximize your money.
“For example, setting strict limits for entertainment and dining out can help you avoid overspending.”
Create a Budget
“Remember a budget is done proactively and gives you a plan for your money,” said Bri Conn, investment advisor representative of Childfree Wealth.
She recommends starting by listing out your expenses and labeling them with must, should, could or won’t, with priority given to anything categorized as a must.
“You’ll likely find you’re spending on things that don’t matter to you without realizing it,” she noted.
Conn advises that when first starting out, you should estimate how much you’ll need for spending in each category based on your last month of spending. Be sure to add sinking funds (planned savings) for car and home maintenance repairs.
Practice Makes Perfect
Gregory M. Fitzgerald, debt protection attorney and founding partner at Fitzgerald & Campbell, says that while creating a budget is really very simple; sticking to it is the hard part.
Similar to Pradhan, Fitzgerald says that the key to making a budget that sticks is finding your reason why. Here are some questions he recommends you ask yourself: Why do you want to be on a budget? What are your long-term financial goals? Do you want to save up to buy a car? Are you trying to get out of debt? Do you wish to retire at 55 instead of 65?
Once you have your reason why, he advises making a budget that allows you to live within your means.
“Learn how to say no and sacrifice where you need to in order to meet your goals. If you are an impulsive shopper, I would also recommend that your budget include miscellaneous spending money to give you the freedom to make impulse purchases, but within reason.”
Lastly, he adds that sticking to a budget takes practice. The first few months are the hardest, but if you stick to it, it does become much easier and eventually it will feel normal.
Review and Adjust Regularly
“Life is full of twists and turns, much like our financial journeys,” said Karina Newman, owner and real estate investor at iBuyers. “It’s akin to navigating a ship, where routine checks are essential.”
She recommends taking a moment every month, quarter, or half-year to reassess your budget.
“Ensure you’re steering smoothly toward your financial goals. If unexpected windfalls or overspending veer you off course, don’t hesitate to tweak your budget. Life events such as weddings or career changes? Make the necessary adjustments to stay on track.”
Debt Management
Handling debt is like solving a puzzle, says Newman. You can start by cataloging all your debts, distinguishing between those with high and low interest rates.
“Conquer the high-interest ones first, employing a strategy like the debt avalanche — tackling the big pieces upfront.”
She also suggests exploring more options like debt consolidation to bundle multiple high-interest debts into a single, lower-interest package.
Additionally, Newman says to consider having a conversation with your creditors as they might be open to lowering those interest rates.
Invest Wisely
Newman explained, “Investing shares similarities with cultivating a garden; you aim for growth over time. Begin by planting the seeds of your goals — be it a flourishing retirement, a thriving home or the fruits of education.
“Test the soil, representing your risk tolerance, to understand what can thrive,” she said. “Scatter your investments across diverse areas like stocks, bonds and real estate to weather unforeseen changes.”
Whether conducting your research or seeking advice from financial experts, Newman advises tending to your garden regularly.
“Prune, water and rearrange your investments as needed to ensure a fruitful harvest.”
Give Yourself Grace
“Don’t lose momentum,” Conn urged. “After the first month, you’ll want to see how your budget went. It’s normal to have over or underestimated certain categories.”
Above all, experts emphasize that learning a new skill such as budgeting will always come with growing pains.
“It won’t go right the first few months,” Conn added. “What’s important is that you make adjustments, learn from them and keep trying.”
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