For many people, the beginning of a new year is the appointed time to get serious and make firm resolutions for positive changes in their lives. It is also customary for some of these people to give up on their self-improvement promises by the time month two or three of the year rolls around.

Very often, the reason that they fail to complete their New Year’s goals is that they did not outline exactly what they were required to do to accomplish them. It makes no sense for you to make nice-sounding resolutions without thinking through the requisite steps to realise them.

Lack of commitment to the hard work required for change to occur is another obstacle to goal achievement. If you wish to reverse an undesired behaviour, you must be willing to do whatever it takes, despite discomfort or inconvenience, to adopt new attitudes and actions.

Plan for your spending

In these times, it is critical for you to have a very good idea of what your lifestyle costs you for the entire year. If you have not developed a habit of planning for your expenses, then your first money objective for 2015 is to prepare a budget that can help you to be aware of your upcoming bills.

A detailed budget will show you when to expect certain expenses that do not occur every month, such as your car insurance, children’s school fees or Christmas holiday costs. You can then determine how much to put aside every month to pay these bills when they come due.

Having a comprehensive spending plan will also give you an opportunity to prioritise your bills, and decide which ones may need to be reduced or eliminated. Since costs are rising much higher than most incomes, you may have to cut back on some expenses in order to make ends meet.

Make a checklist of expenses

The first step in creating your budget is to devote a few hours to consider your lifestyle and the costs associated with it. Whether you write on paper or use a computer, go through each month and think about all the upcoming events and transactions that will require you to spend money.

Remember that the money you save is an expense as well, and don’t leave out small-ticket items as they can throw out your entire budget. To make this process simpler, you can download a spreadsheet with a detailed list of expenses that most persons will incur at www.financiallysmart.org.

When making your list, include all the costs that must be paid, even if you are not the person who will foot the bill. For example, if your children’s school fees are covered by a relative who does not live in your household, you should still record it as a line item that is part of your budget.

Determine realistic costs

Once you have completed your checklist, you then need to consider how much each item will cost you for a day, week, month or year. If you don’t usually make note of your spending, you might find this step challenging, but there are ways to make realistic estimates about your expenses.

Look through old bills, or review your debit or credit card statement to help you verify previous payments. You can also use a small notebook or your smartphone to record every time you spend money. After a few months you should have a better idea of some of your regular costs.

If you are clueless about what you pay for things such as gifts or clothing, try to set a reasonable spending limit for the year that is based on your lifestyle. After you input all your other expenses, you can decide if you can really afford to spend that amount of your income on these items.

Calculate average monthly costs

Next, work out the average cost of your expenses for one month. So, if you purchase J$9,000 worth of cooking gas three times each year, your annual spend is J$27,000. Divide this by 12 to get an average monthly cost of J$2,250. This is the amount you need to earn each month to cover this bill.

Add up the figures of all your average monthly expenses, and you will discover the total cost of your lifestyle per month. Although you may not actually spend that sum each month, you need to earn that average amount, if you wish to pay your bills without being stressed or resorting to loans.

Then, make a note of all your income such as salary, spousal support, remittances or drawings from business. Every money source used to pay bills should be included. Finally, subtract your total expenses from your total income to determine if you have a surplus or shortfall of income.

If you’re struggling to make ends meet, then you already know that your total income is insufficient. To achieve a balanced budget, identify expenses that you could try to reduce or do without. Also, you may need to use your shortfall as a target amount to increase your income every month.

Copyright © 2015 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, January 8, 2015

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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl