Here are four simple steps for you to budget in the new year.

New Year’s Resolution Guide to Budgeting

by Kaitlyn Ranze and Emily Elmore | 23 December 2020

You have a lot of transactions – money coming in and going out. How do you track it all and how can you optimize your money moves for the new year? Here’s a simple guide for budgeting.

Click the link for a free downloadable guide.

Know Which Way the Money is Moving

Unless you’re zero-based budgeting, if you don’t have a little extra at the end of a month, you might be putting extra expenses on a credit card, increasing your overall debt. Ultimately, you want money left over each month.
(Having trouble making ends meet? Make a crisis budget.)

To keep it simple we’ll do this for one month.

1.Determine how much you earned.

Add up your wages along with any stipends (like an internship for example) or supplementary allotments like alimony, child support, disability, etc. If you work in cash, moving forward you’ll have to start tracking the cash flow as well.

2. Determine how much you spent.

You can do this quickly by looking at your bank statement totals for the entire month.

  • How much did you spend in checking last month?
  • How much did you charge to your credit card?
  • Did you pull anything out of savings?

Looking at these should cover most of your expenses.

(Not into writing it out? Check out’s automated and customized budgeting, downloadable at the Google Play and Apple Store. )

3. Subtract expenses from income.

For example, if you make about $500 per week and spend $1300 in rent, groceries, utilities, and entertainment: $2000-$1300 = $700 leftover at the end of the month.

How did you do? Do you have extra, or did you spend more than you earn?

Though this is an estimate because there’s some variability, this first step will let you know if you need to tighten your belt.

Pro tip: Don’t get stuck in the weeds. You’re more likely to follow through with making (and following) a budget if you keep it simple.

Break Down Income and Expenses

We recommend using these categories to break down your income and expenses, but you can always add or remove categories depending on your income streams and personal expenses.

The money app automates your budgeting and has customizable categories.


  • Wages
  • Allotments
  • Other income


  • Housing
  • Transportation
  • Food
  • Insurance
  • Loans
  • Personal Care
  • Children
  • Pets
  • Entertainment
  • Taxes
  • Gifts and Charity

If you’re using the app, once you connect your accounts, you can make and manage your budget from your dashboard. Easy peasy. If you prefer spreadsheets, you can find templates in Excel or Google Sheets as well.

Once it’s filled out you can see trends by month, season, and year. If you’re using a spreadsheet, save your bank statements and manually type them in. Once you get the hang of it, spend 10 minutes at the end of every month updating your budget. That’s less than a sweat sesh at the gym and just as important for your health.

Step 4: Optimize Your Budget Around Your Goals

Maybe you’re trying to pay off credit card debt or save for a trip. Whether you’re moving into a new apartment or just want to save for retirement, you probably have something you’d like to allocate more dollars to.

(Travel fund? Emergency fund? Try automating it.)

Scenario One: You spend more than you earn.

Now that you know what you have, time to change some behaviors to make sure you’re not accruing more debt. You can earn more, spend less, or do a little of both.

Earn more: take on a second job or start a side-hustle from a hobby. You could tutor, become a virtual assistant, or start an online store. Your options are limited only by creativity.

Spend less: Make a list of essential expenses. Housing, transportation, food, and kids all need a chunk of your paycheck. If you’re trying to reduce spending, identify the non-essential items you’re willing to stop funding first. This might be cutting the cable cord, or reducing the frequency that you dine out.

Once you have a goal you can determine where you can save in order to meet that goal. It doesn’t mean you have to live in austerity, but it does mean you need to be mindful of each expense and budget for it. If your budget can’t accommodate going out to lunch daily with your coworkers, bring your lunch. It’s your money, and it’s your budget. Once you know where it’s going you can choose to cut back, earn more, or allocate differently.

While you’re reducing spending, you can also save some dollars on the essentials. Often groceries are a huge chunk of change, and choosing the store brand can reduce that weekly bill.

Scenario Two: You break even or have a little extra.

You have a good idea how much you earn and don’t go over. The next essential step to budgeting are increasing your financial resilience.

The APR calculator helps you decide how much you can pay down.
APR calculator in the money app.

Do you have anemergency fund? This is for unscheduled emergencies (cough cough, coronavirus) and can save your butt if your income is disrupted. Ideally, this fund has at least 3-6 months of savings but with this pandemic extending well into 9 months, save until you’re feeling secure and comfortable.

If you already have an emergency fund, consider paying off more debt. Whatever the interest rate is on your debt is how much of a return on investment you receive when you pay it off early.

Once the debt is gone you can focus on investments and growing your wealth. This might look like an IRA for retirementstocks and bonds once the market improves, real estate investment for passive income, or maybe an investment in your health through a much-needed vacation, spa day, or therapy sesh.

These simple steps to budgeting will help you determine how much you spend and earn, tracking it, and creative goals that will set you up for financial success in the new year.

Related Reads:

Five Minute Guide to Stock Investing

Investments for Long-Term Goals

Short -Term Investments

Are You into Safe or Sexy Stocks?

We’re changing the narrative around money but change can’t happen with a one-sided conversation. Send us an email and let us know what you think. And remember the money app offers you free tools for budgeting, account aggregation, and debt repayment calculators.

You can download it at Google Play and the Apple Store.

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