I'm ready to be a money boss in the new year. Great actionable tips here for starting the year out strong by getting super organized with your budget!

My Checklist For Creating a Budget for The New Year

Checklists, new year resolutions, and budgets. Three of my favorite things! And today we’re bringing them all together.

I'm ready to be a money boss in the new year. Great actionable tips here for starting the year out strong by getting super organized with your budget!

As a self-proclaimed money nerd, I enjoy setting up my finances for a brand new year. There’s something about being able to start all over and improve the process each time that motivates me. Regardless of whether the last year was a total mess or a total success, I’m always excited to begin again.

Each year, I make some small improvements that will help me to get closer and closer to my financial goals. I’ve seen the benefits of taking the time to organize a system that works well for me. This time investment pays dividends all year long. I’m able to save more money and spend less time ensuring that expenses are kept low.

This is the process I follow to get everything set up for the new year.

Think About Where Your Budget Is Going To Get You

First of all, what’s the point in spending all this time planning and tracking your money if you don’t have a true underlying purpose for it? There is no point, and that’s why so many people fail at budgeting.

That’s why I suggest that you start by setting your new year’s goals first. Much of this is completely separate from your personal finances altogether. So go ahead and set those new years resolutions before starting your budget: commit to eating healthier, exercise more, learn that new skill. Even better, think about the next five, ten or more years into the future.

Then, look at those goals and determine the financial resources you need this next year to help you get there. Maybe you need to set aside money each month for a gym membership, nutritionist, or a tutor.

In addition to new year’s goals, there may be some additional large purchases that you need to save for this year. That always includes retirement (unless you’re already retired!), but you may also need to set aside money for a new car, home improvements, or certainly an emergency fund if you don’t yet have one.

After knowing where you’re going and how much it’s going to cost, the next thing will be to break those down into more manageable steps. I prefer to set monthly target, but you could also set amounts per paycheck, quarterly or any other method that may work for you.

Goal-Setting Action Items:

  1. Review past goals
  2. Set new year’s goals
  3. Determine the financial resources needed to achieve those goals
  4. Quantify and break down your goals into monthly (or other) increments

Review Last Year’s Budget For Improvement Opportunities

Before I start all over again with my budget, I look through the past year and see what worked and what didn’t work well. This way, I can make some changes that will make the next year go smoother. It’s about focusing on progress and not perfection.

Some of the things that I’m looking for include:

  • Budget categories that need to be reduced in the next year to better align with my values
  • Budget categories that should be increased in the next year to better align with my values
  • Any new categories that should be added for the next year
  • Any categories that aren’t used very much that I can consolidate into other categories for simplicity
  • Any areas of consistent overspending that I might be able to benefit from breaking out into separate categories to better track (for example, food can be broken out into groceries, eating out as a family, eating out for lunch at work, school lunches, etc.)
  • Ways to simplify or breakout specific items for tax reasons

In addition, this is a good time to consider whether the budgeting system you’re working is working well for you personally. It’s no secret that I use and love YNAB, but there are lots of other great resources out there. Some people simply choose to use Excel or pen and paper, and if that works for you, great!

Budget Review Action Items:

  1. Go through each budget category individually and ask yourself if it aligns with your values and whether should be broken out or consolidated
  2. Integrate your goals into your budget
  3. Consider whether your current overall budgeting software/system is working well

Logistically Update the Budget

Now that you’ve thought through why you’re creating your budget and how you want it to look, the real work begins. It’s time to get everything set up and ready to go (so exciting, right?!).

My budget spreadsheet that I’ve shared earlier works great for those wanting to use Excel (or Google Docs) to track their budget and spending on an annual and monthly basis. It seems a little daunting to estimate an entire year’s budget, but if you’ve kept a budget for an entire year, it shouldn’t be too overwhelming. Realizing that it’s just an estimate and looking at your average spending from the past year will help a lot to streamline this process.

Example of Annual and Monthly Budgets

However, the most recent method I’ve been using to set up my annual budget is a little bit different. Instead of transferring all of my monthly budget and spending to Excel, which would be repetitive since I already track it in YNAB, I keep an annual cash flow spreadsheet where I set up the entire annual projection at the very beginning of the year. This preliminary spreadsheet is printed to a PDF file to document my original plan for the year.

Then throughout the year, I update the income and expense amounts on a monthly basis from my YNAB budget, marking which months are actual cash flow versus the months that are still budgeted amounts. At this point, I have a mix of past and future expenses which gives me the best estimate of cash flow for the year at any given point in time throughout the year. Several times a year, I update this annual budget based on pay raises or bonuses.

Being able to see an updated total for the entire year at any point in time is especially helpful for me when it comes to tax planning, investing, and savings for my goals.

As for my monthly budget, I’ve shared extensively how I use YNAB to setup, track and monitor my budget. It’s mostly about being consistent and flexible. Just always keep your goals in mind!

Budget Implementation Action Items:

  1. Update your budget for the category changes brainstormed earlier
  2. Project an annual budget for the entire year and create a PDF copy for your files
  3. Set up your January budget and just begin!

Final Thoughts

Budgeting is just a tool to help you along your path to financial freedom. It takes a little bit of work, but with some preliminary setup, you can streamline the process and set yourself up for success.

What do you personally do to set up your finances for a brand new year?



4 Responses

  1. I usually check all my investment accounts and rebalance my portfolio during the time of the year. This way I can update them in order to meet my risk tolerance.
    In terms of budgeting, since we save a good amount every year we tend to look at just one or two categories(most of the time is groceries) and see if we can make some adjustments to it.

  2. I’m thinking of taking a year off work next year, buy/rent an RV and just drive cross country. I’ve seen several people do this, and it’s actually quite cheap. I guess I should create a budget for this, because the costs can vary greatly depending on what I do and how I plan the trip.

    1. Have you followed Steve & Courtney’s blog Think Save Retire? They also have a YouTube channel called “A Streamin Life” where they share their budget for living full-time in an RV. You should check it out!



I’m Kathryn Hanna-wife, mother of 3 and a Certified Public Accountant. I love to budget (really, I do!) , build spreadsheets and spend money on travel, sewing supplies and good chocolate.


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