So, you’ve set your New Year’s resolutions. Maybe you want to travel more, buy a home, or join a gym. While these are certainly common goals, they all require one thing: budgeting. Creating a budget for the new year is one of the most impactful things you can do to help you start off on the right foot. It’s also very achievable! Especially when you have the proper tools.
Here are some steps to consider when crafting a budget that will help you achieve your goals in 2025.
Step One: Reflection
Reflecting on last year’s finances can be a helpful first step when crafting your new budget. It will help you evaluate your financial habits, see what works, and find areas for improvement.
- Evaluate your savings over the last year
- Calculate any payments towards debt
- Identify areas that may have seen overspending
- Detail any unexpected expenses that may have popped up
- Review your spending in online banking or the Signal mobile app
- Take the Financial Health Assessment to see how financially savvy you are
This will ultimately help you identify your spending patterns and inform you of what your goals may look like for the next 12 months. A great start is to use our Spending Insights tool to see how and where you spent your money last year.
Step Two: Compile Your Current Finances
Understanding your finances as they are now is another vital part of budgeting. To do this, create a list with detailed numbers like:
- Income (including salary, side hustles, and any other forms)
- Recurring expenses (rent or mortgage, utilities, insurance, subscriptions)
- Fluctuating expenses (groceries, entertainment, gas, dining out)
- Savings (how much you delegate each month)
- Debt payments (how much you pay monthly—including any planned additional payments)
This will help you discern between necessities and add-ons when it comes to your finances. Do you need three separate streaming services, or is there a bundle you can find for less? Should you limit dining out to twice a month so you can put more towards groceries?
Step Three: Create Your Goals
SMART goals are a great approach to budget goal setting. They’re specific, measurable, achievable, relevant, and timely. Some examples include:
- Make an additional $500 car payment by June
- Pay off $2,000 in student loans by the end of the year
- Save $300 for vacation expenses by May 30
These are great ways to stay motivated and keep in line with the budget you’re setting for this year. You can create a Savings Goal in your online banking account so you can track your progress towards things like saving for a down payment, vacation, or debt repayment.
Step Four: Select Your Budget Method
Finding a budget method that works best for you is another great way to stay on track. Budgeting looks different for everyone, and that’s not an understatement. Everyone has different goals, spending habits, and finances. Here are some common methods to consider:
- Zero-Based Budgeting: When you have set income and expenses each month, this method is great for tracking where your money goes. Do this by calculating your monthly income and then subtracting all your expenses for the month (including savings) until you reach zero.
- Pay Yourself First Budgeting: When you want to focus on savings and debt reduction, this method works for both. Each month, take a specific amount from your paycheck and set it aside for savings and/or debt repayment. Reducing debt can allow you to focus on other goals as well, like saving for an emergency fund or a trip.
- 50/30/20 Budgeting: When you’re new to budgeting, this is an option that allows you to break down your expenses into categories with limited monitoring. You dedicate 50% of your income to necessities, 20% to savings and debt repayment, and 30% to nonessentials. Another bonus of this method is customizability, which depends on your finances and goals. If 50/20/30 doesn’t work, consider adjusting it to 60/20/20/ or 40/25/35.
While a budget is important, it’s also necessary to leave room for accommodation. Try having a couple of months’ worth of expenses saved up in case of an emergency and adjust your budget as needed to stay on track.
There are plenty of tools to help you reach your goals, because setting a budget isn’t a one-and-done deal. You must be able to stick to and evaluate it, and pivot when needed. Online banking and the Signal mobile app offer free financial planning tools including a Financial Health Assessment, Spending Insights, and Savings Goals to help you take ownership of your finances this year and onward.
Budgeting is an important tool, and the process of building one doesn’t have to be unenjoyable. Find creative ways to create and follow your budget, and don’t forget to reward yourself for sticking to it every so often!
Take control of your finances this year and celebrate some financial wins. Happy budgeting!
