The New Year is almost here. How are you going to change your financial situation? Now is a good time to look at your budget. Here are six steps you can take in reaching your financial goals next year. Remember to use an ecommerce CRM to keep track of all the money that goes in and out of your bank account.

Track Your Income

You need to take a look at the money that is coming in every month. Take a closer look at your income. Your money sources can come from your after-tax income, affiliate marketing income, blogging income, employment income, self-publishing income, side hustle income, and more.

This can give you a better idea of what you should base your budget on. Not sure where you should start? Your bank account is a great place to start. Take a look at your paycheck stubs, and compare them to your bank account. Spending less than what you earn is a huge part of budgeting. Knowing how much you make is the most important step.

Track Your Expenses

The next thing you should do is to notice where all of your money is going. You want to take a closer look at your monthly expenses. The most common expenses include your cell phone bill, cable bill, care insurance, entertainment, food, gasoline, health insurance, life insurance, travel expenses, mortgage/rent, utility bills, etc.

To get a better idea, take a look at the past 90 days by looking through your bank account. This can give you an estimate on how much you spend each month.

Determine Your Credit Score

You should know your credit score if you plan on saving money on a luxury vacation or a vehicle in the New Year. Your credit score can determine the interest rate you pay on loans you borrow for these high-cost items. You need to know your credit score to determine your monthly payments.

If you’re not intending on borrowing loans in the New Year, keep track of your credit score so you know when it’s a good time to borrow. It is easy to find out what your credit score these days.

There are plenty of free sites that help you find out your score within minutes. Read the terms before using any of these sites.

Determine Your Needs vs. Wants

Now that you know your income and expenses, it is time to budget. You need to spend less than you make and have room to budget for debt repayments, savings, and additional expenses. If you are discouraged by your expenses and income, then you need to determine your needs versus wants.

You need a place to live. It is important for you to pay your rent or mortgage each money. When it comes to entertainment, you could probably cut back on going to the movies and eating out. Take another look at your expenses and label them as a “need” or “want.”

Rate each of these wants on a scale from one to five, with five being the most necessary. Rate each of your wants based on how much you want them in your life. Ditch those that are not necessary to your life.

Plan for Emergencies

No matter how much you prepare your budget, there are always unexpected moments in life. Some of these unplanned events include car repair costs, medical bills, or taxes. It can be hard to plan and keep track of those unplanned expenses. You can call them “miscellaneous” expenses that pop up.

Think about the emergency situations that may happen annually or quarterly. Some examples include an annual renter’s insurance bill, quarterly life insurance payments, or an annual city tax. If you don’t already have disability insurance, you might want to consider going to this website and taking out a policy to protect your income should your ability to work become affected by disability. It is a good idea to have padding in case these unexpected events occur.

Create a System that Works For You

Now it is really time to really work on your budget. With your income in mind, create a list of categories with an amount for each one. The total amount of your categories should not cost more than your income. When you have the amount in mind, you can create a budget that will help you start the New Year right.

You definitely should not stop there. You should track your spending once a month or once a week to make sure you are sticking to your budget. You can use pen and paper to keep track, or you can use an ecommerce crm to do it all for you.

As you progress, you can determine whether you are staying within your budget or not. If not, you can tweak it according to your spending or lifestyle changes. Your budget does not have to feel restricted. It should be at an amount that works for you and your family.