4 tips for better budgeting in 2019

Looking for a better way to budget in 2019? Read these 4 tips to help you control your budget this year.

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Up there with losing weight and getting into better shape, saving money is a popular New Year's resolution to aim for. And the key to saving money is none other than having a solid budget in place. If you've tried budgeting in the past but have failed at it, here are a few tips to get you started off on the right foot this year.

1. Don't just guess at what things cost you

Unless you withdraw large sums of cash each month and use it to physically pay your bills, chances are there's a record of your spending somewhere, and getting at it is generally a simple matter of accessing your bank and credit card statements. One reason budgeting may not have worked for you in the past is that you were guessing at your various expenses rather than relying on hard numbers.

So in this early part of the new year kicks in, comb through your expenses over the past year so that you have more accurate data to use when establishing your 2019 budget. It'll save you a world of frustration, all the while putting you in a better place to take control of your spending.

2. Remember those one-time expenses

You're no doubt aware that you'll need to factor your recurring monthly expenses into your budget—things like your rent or mortgage payment, car payment, grocery tab, and cable bill. And while you might already be accounting accurately for those, one major budgeting mistake people tend to make is forgetting about expenses that pop up only once a year—things like professional license renewals, warehouse-club fees, and certain subscriptions.

The problem, however, is that if you don't spread out the cost of those items over 12 months and set money aside for them, you'll be in for an unpleasant financial surprise when they come due. So take a look at your records from the past year and take note of bills you paid only once or twice, like that $150 certification fee for your job or the $120 you spent to renew your roadside-assistance plan.

3. Be realistic when cutting expenses

Folks intent on saving money often look at their budgets and say things like, "Going forward, I'll cut all nonessentials and start banking some serious bucks." It's a nice idea in theory but a difficult one to uphold in practice. After all, depriving yourself of all luxuries or ones you enjoy a lot is really no way to live.

A better bet, therefore, is to pledge to cut a few expenses, but plan on upholding most of your current spending habits. If, for example, you buy a morning coffee at the local shop on a daily basis and you eat takeout 3 nights a week, going from that to buying no prepared food or beverages is likely to make you miserable—which means you're less likely to stick to that pledge. But if you commit to cutting out 2 coffees and 1 takeout meal a week, your chances of success might improve.

4. Save first, spend later

Many people budget with the goal of saving money, yet many people also map out their expenses and decide that whatever money is left over—if there's money left over—will go into savings. A better approach, however, is to do the opposite—decide off the bat that you're going to be saving 15% of your earnings each month and work backward from there. This way, you'll force yourself to be smarter with your remaining funds, all the while meeting the savings goals you set for yourself.

You don't need to be a financial wiz to succeed at budgeting. Follow these tips and with any luck, 2019 will be the year you manage to stick to that budget—and boost your savings, as a result.

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Article copyright 2018 by Maruie Backman from The Motley Fool. Reprinted from the December 17, 2018 issue with permission from The Motley Fool.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third-party provider of the reprint permission and Fidelity Investments are independent entities and are not legally affiliated.

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