Psst… it’s almost January—the perfect time to reflect on the past year and look to the year ahead.
While you’re eating your way through holiday treats (no judgment here!) and getting ready to spend some time with your loved ones, take some time to consider what your overall priorities are for the year to come. Do you have any specific goals or financial resolutions? What can you look back on this time next year that will make you smile and feel proud?
Use these questions to guide your yearly budget, making sure to leave ample opportunity (and room in your budget) to satisfy your life goals. Not sure where your priorities lie? Follow the guide below to help you figure out what to focus your energy and efforts on.
Select Meaningful, Fun Things to Spend Money On
Once you know you’ll have the necessities covered, make your personal budget categories (i.e., the rest of your money) count! Your expendable income can fuel your happiness when you spend it in ways that matter to you—and not on things that you’ll forget about or throw away before next year. Get inspired by these spending lessons from people who have done just that.
SPENDING LESSON 1: QUALITY IS OFTEN WORTH THE HIGHER PRICE TAG, AND SO ARE THE MEMORIES.
For Sean Piscitelli, 31, it’s important to have top-notch camera equipment to further hone his craft, so he plans his yearly budget accordingly.
“Photography is a long-time passion of mine,” says Piscitelli. “It’s worth it to me when I spend money on quality equipment because enhancing my work to create continuously better photos makes me happy.” His other main spending priority is visiting new places, often during his annual snowboarding trip with friends.
“A trip creates a whole memory,” he explains. “I don’t have something physical after it, but I do have a lot of stories to tell.” Piscitelli works major travel expenses, like airline tickets and accommodations, into his budget and pays for them upfront. Then, to ease any guilt he’d have about spending money while on vacation, he curbs unnecessary spending ahead of these trips.
“Putting something fun that I care about in my budget makes me more disciplined with my money,” he says. “I don’t impulse-buy as much and can stay away from other temptations.”
SPENDING LESSON 2: ACHIEVING A GOAL IS MORE MEANINGFUL THAN FRIVOLOUS SPENDING.
When Amanda Creasey, 33, and her husband saw a great deal on a foreclosed vacation fixer-upper, they knew they had to consider it. It was one of their life goals to have a spot of their own near water, so this purchase would mean a lot to them, if they could make it work.
After examining their yearly budget, they found out how much they’d need to cover their required expenses, including their bills and savings plan. Then they determined how much money was left and looked at how they had been spending it.
“It turned out that most of our spending was fairly frivolous,” Creasey says. “We decided to spend that money on our new house instead and knew exactly where we could cut other spending that didn’t enhance our lives anyway.”
SPENDING LESSON 3: WHEN YOU PLAN TO SPLURGE, ADJUST OTHER NONESSENTIAL SPENDING IN YOUR BUDGET.
When Annie Junker, 30, decided to make her first major purchase, she was a bit nervous. It was her dream car, and while it was a splurge, she knew it was something she wanted and used this goal to guide her other spending.
“I really loved that car, so I cut back my spending in other areas like coffeehouses and mall shopping sprees,” she says. “Once the paperwork was signed I breathed a sigh of relief and got excited. Making my first ‘adult’ purchase made me proud.”
How Will You Spend Your Money Next Year?
When planning your annual budget, give yourself the freedom to think beyond long-term financial goals like building an emergency fund. This year, choose things to spend your money on that fulfill you most and support your top priorities.
Have you been dreaming about visiting friends you haven’t seen for a long time? Is your office wardrobe in dire need of a revamp? Do you want to travel to Holland this spring and bike through the tulip fields? Work your ideas into your budget.
Your goals will motivate you to keep tabs on your spending. When you have things to look forward to throughout the year, you may even find it easier to stop spending carelessly, instead reserving your savings for things and experiences that matter to you. That way, when you look back, you can feel proud of how you spent your money—and your time—rather than wondering where it all went.