New year, new you — and new budget

Learning to proactively budget may be a small part of the budgeting process, but it can also be a serious life-saver. Learning to plan ahead for future expenses can save you from the headache of trying to figure out a financial plan to pay for expenses as they come up.

For example, one of the most forgotten-about expenses is car registration, which rears its ugly head once a year and can costs hundreds of dollars at one time. For more than 40% of Americans, covering even a $400 expense today would be impossible without the use of a credit card or a loan. So, car registration can make or break a lot of us!

Proactive budgeting encourages you to save a small portion of an upcoming expense monthly. By the time the expense has to be paid, you’ve got it all ready to go.

Let’s look at it in real dollars: Say your car registration is due in November and will cost around $400. It’s January now. By saving $37 a month from January to November, you will have enough money to pay the registration in full without the use of a credit card or loan. This is proactive budgeting!

Some other annual or bi-annual expenses a lot of us forget about include fees for sports, school pictures, back-to-school shopping, travel, car insurance (if premium is paid every six months), down payments, holiday expenses, and periodic education expenses. Saving for more common expenses like haircuts, summer activities, and entertainment opportunities can help your budget prepare for upcoming costs.

So, plan ahead! Think about last year’s surprise expenses and save monthly for the larger expenses. Use the beginning of the year as your starting point to save a little now in order to have a lot later! The more time you give yourself, the less you’ll need to save monthly, and the less likely you’ll need credit or a loan to cover what you know is coming.

Proactively planning for retirement

Experts would suggest you’ll likely need 80% of your current working income in retirement. We all have our own lifestyle, and you’ll likely carry over 80% of those expenses — or more. Some things to consider as you proactively plan for your upcoming retirement:

What are your plans? Will you travel more? By car, cruise, plane? Are you taking up a hobby? Taking care of family? Building your dream home or cruising in your dream car?

If your lifestyle will change in retirement, as many retirees experience, budgeting for those experiences is important to plan for now. Test-drive that budget the closer you are to retirement and make adjustments as needed.

Proactive budgeting simply means planning ahead, saving a little now so you have the funds available later. Plan ahead, commit to saving, and spend the year enjoying life’s little surprises!