New Year resolutions: Budget like a pro

BRYAN, Texas (KBTX) – Forbes Health reported improving finances is a top 2024 resolution.

Although creating a budget or getting back on track can be overwhelming, financial education expert Nick Kilmer joined BVTM Wednesday to share some budgeting tips.

Kilmer is with the Texas A&M Financial Planning Program in the Department of Agricultural Economics

“If you want to kick off your 2024 the right way financially, you have to be motivated to do so,” Kilmer said. “That’s where our financial goals come in.”

Put Pen to Paper

Kilmer recommends writing down your top five financial goals and figuring out how much they’ll cost and when they can be achieved.

“That’s gonna motivate you to improve your wealth and also stay on track when it comes to budgeting your money every single month,” Kilmer said.

Build Your Budget

This starts with tracking your income and expenses so that you can discover what to cut back on.

“The hope is to grow the difference each month, what’s called your net income,” Kilmer said. “If you’re able to cut back on some of your expenses this upcoming month, then the hope is that you have greater net income and you can apply that towards the financial goals you set for 2024.”

There are multiple ways to track your income and expenses, so Kilmer suggests finding what works best for you and your family.

The envelope method is a tool that requires using cash on each of your expenses each month. Although this can seem painful, Kilmer said this can cause people to curb some of their bad spending. This can also help identify your latte factors.

“A latte factor is just an expense every month that you neither need nor necessarily want or you’re just overspending in that area,” Kilmer said.

Examples of this include eating out or getting coffee too often or paying for subscription services you barely use.

“I’m not saying go cold Turkey and stop drinking at Starbucks,” Kilmer said. “That won’t end well for you or anyone near you when you’re grumpy but maybe cut back a little bit and reallocate that money towards those goals for 2024.”

In addition, online resources including Dave Ramsey’s Every Dollar App and the Empower App can be helpful, especially if you want an automatic way to track your money.

Kilmer also recommends the Consumer Financial Protection Bureau website and NerdWallet, which is an independently-owned platform.

“Both offer a lot of information on things like banking, credit, taxes, insurance, investing, home buying and home ownership,” Kilmer said.

If you’re researching bank options or looking for your next credit card, the expert suggests bankrate.com.

“It does a great job, especially for anyone who’s looking for a credit card, or even if you’re looking for bank accounts as well, really breaking down the fees, the interest rates and the requirements to access and take advantage of certain bank accounts or credit cards, etc.,” Kilmer said.

Outside of the internet, Kilmer recommends the book “Rich Dad Poor Dad” by Robert Kiyosaki.

“It’s a very entertaining book, and he does a very good job just explaining how normal people like you and I can start growing our wealth and in effective ways throughout this year,” Kilmer said.

Share Goals with Friends and Family

Instead of keeping your goals to yourself, sharing them with friends and family can be a great way to stay accountable, according to Kilmer.

“Because later on when I start falling off the wagon, whether I want them to or not, some of them are gonna eagerly remind me of what my financial goals were so that I can stay on track.”

The financial education expert said your support system will also be there to celebrate your financial accomplishments.

For those with families or planning to start one, it’s important to establish financial behaviors early, according to Kilmer.

“We establish our financial behaviors for a lifetime by the age of 7,” Kilmer said. “If you want to help yourself out in the long run as a parent or a future parent, teach your kids about money, they will be cheaper in the long run.”

For young adults, Kilmer said now is the time to build credit. This can be done by opening a credit card and using it each month, paying off the balance in full while making sure the account balance never exceeds 10% of the credit limit.

“This is the quickest way to grow your credit score without paying any interest or fees,” Kilmer said.

In addition, opening a Roth IRA can be a start to investing for the future, according to Kilmer.

“You’re at the lowest effective tax rate that you’ll have in your lifetime and so opening a Roth IRA allows you to pay the upfront taxes, which could be zero on your contribution to that account,” Kilmer said. “Then when you withdraw the money at retirement to not have to pay taxes at that time, effectively saving you a lot of money in taxes.”