February 2023 Resident Newsletter

2023 Budget Tips

Interest rates are rising. Inflation is at historically high levels. Now is the time to focus on budgeting and financial literacy. Expenses are climbing for everyone, so it is important to monitor your finances to help make the most out of the income you get each month. Here are some simple tips that may be helpful so you can control your finances versus them controlling you!

Budget Tip #1: Start by comparing your monthly income and expenses. Use your last month’s bank statement to write down your income over the month in one column and list all your expenses in another. Financial experts recommend categorizing your bills into buckets like house bills, personal bills, credit cards/loans, emergency savings, and dream savings. It helps to further differentiate your expenses based on which ones are fixed (don’t change each month) and which ones are variable (different amounts each time, like gas or eating out).

By breaking expenses into categories, you can see where the most attention is needed. Analyze your expenses to see exactly how much you are spending on unnecessary items, or to see which luxury items and services are costing you the most. Evaluate each expense to see if there is a possibility for a better price. Consider items like car insurance, cell phone bills, and cable. 

Tip #1 Resource: Dave Ramsey has a free budget app we recommend! https://www.ramseysolutions.com/

Budget Tip #2: Food expenses make up a large portion of a family’s budget. Things like eating out or going out for drinks and entertainment can add up quickly. By cooking at home, or by doing hobbies and interests that occupy your time and don’t have an expense attached, you can likely save hundreds each month on your expenses. Always make a list before going to the store! Hungry people without a plan spend more 🙂 Having a list helps avoid buying things you don’t actually need when the ice cream is calling your name! Planning meals ahead of time, and scheduling when you are going to eat out also helps control the urge to spontaneously spend when the work day has been long and you’re too exhausted to cook. Trust me, we get it! Planning ahead really does help.

Budget Tip #3: Transportation expenses are also significant.  Do you have a long commute? Try carpooling with a coworker. If your car payment exceeds your comfort level, look at trading it in for a more affordable car. Plan your driving to get the most from that tank of gas. And keep up with normal car maintenance like oil changes so that the investment you’ve made in your car lasts you as long as possible.

Budget Tip #4:  As a good general rule, you can try to follow the 50/30/20 method to come up with a good idea of how to split up your income each month. This means you should spend 50% of your income on necessities, 30% on your wants, and then 20% of your income should go towards savings, investments, or paying off debts. We also love the idea of “profit first” where you set aside the first 10% of your income each pay period to savings. While normally a method used by small business owners, the book can be applied to normal daily life, too!

Tip #4 Resource: https://mikemichalowicz.com/profit-first/ 

We hope these are helpful tools for you to feel empowered and set up for success in your day-to-day finances. Money is the #1 stressor for families and spending a little extra time focused on a budget, can help reduce stress and increase happiness! Cheers to 2023 being full of HAPPY hearts and wallets!

Additional Resources

Mr. Money Mustache has a plethora of money saving tips. https://www.mrmoneymustache.com/

The American Institute of CPA’s offers some great financial advice. https://www.360financialliteracy.org/