Create wiggle room in your budget

Have you ever looked at your W-2 and other tax statements and said, “I earned a lot of money this year, so where did it all go”? The best way to look at the money trail is to sit down and find out where the money went. As you prepare your personal finances for 2016, here are a few tips to keep in mind that may better help you manage your money.

Find strengths and weaknesses in your cash flow

Grab your financial statements and look at your transaction activity from the past year to help identify trends in your debit card spending. Did your daily coffee cost rise from a $2 to $4? Is the extended daily commute in traffic to and from work costing you more in gas? If you work at eliminating those outstanding costs by purchasing instant coffee for work (which is pennies on the dollar) and commuting or leaving for work earlier to avoid being stuck in traffic, you can trim away at the deficit.

Set an annual budget with wiggle room

You can do a deep dive into your finances by reviewing two years’ worth of transactions to determine how much you’re spending and where. With is information, you can craft a new budget for the new year with savings in mind. Your goal should be to spend below what you have done for the past two years.

Find or make deductions

Do you have a side job and have a home office? You could deduct the expenses from your home office if you itemize your deductions. Your personal tax advisor will be able to provide you information about this type of deductible. If you had work-related expenses that weren’t covered by your employer, don’t forget to add those as an itemized-deduction.

Need some more insight on how to create a plan for next year? Check out our Five Ways to Organize Your Finances financial guide!

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