Common-sense budgeting isn't high finance

University of Scranton research suggests that just eight per cent of people achieve their New Year's goals. This year, we say it’s time to figure out how they do it and set some solid financial goals.

Maybe you need to pay off some holiday bills or set new savings goals. Maybe you don’t even have a budget and now’s the time to start by reviewing all your expenses, including home and auto insurance costs. Don’t be afraid to compare.  Whatever the case, you need to know what you’re spending and where before you can make your money work for you.

Here’s a few tips to help get you off on the right foot.

1. Start today.People procrastinate for a variety of reasons ranging from low energy levels, unhealthy lifestyles or fear of failure. But if you don’t start, it will never happen. The first step is just writing down a basic list of living expenses and what’s left over. Monitor how you spend all your money for one month. There’s lots of apps that make tracking your daily living expenses a snap. Bet you’ll be surprised how much those lattes add up to!
2. Have a purpose.Is your goal to save money for a house, retirement or a renovation project? When there’s a purpose you have a much greater chance of success.
3. Start small. If you set unrealistic goals you’ll likely be disappointed with the results. Once you start meeting the small goals, the success will become further motivation.
4. Keep it simple. Complicated spreadsheets may be OK for accountants but this is a home budget we’re talking about. A Harvard bankruptcy expert Elizabeth Warren came up with the "50/30/20 rule." In other words, 50% of your after-tax income should be focused on needs: groceries, housing, utilities, car payments and any uncovered healthcare expenses. 30% is based on your wants: shopping, dining out and hobbies. The final 20% covers things such as repaying debt, emergency funds or retirement savings.

Here’s an example: Your after-tax take-home pay is $3,500. Using the 50-30-20 rule, you can spend no more than $1,750 on your needs per month. You can spend $1,050 a month on your wants. You might consider doing without a few things and shifting some of this money to your needs column if you're coming up short. You should have $700 left over to repay debt or save.

There are lots of other models to follow too but whichever you choose, keep things simple.

5. Review your expenses and make the necessary adjustments. Can you save money on your cable bill, home and auto insurance policies or cell phone bill? You’d be surprised how much a simple annual review can do for your bank balance.
6. Be accountable every month. Be honest with yourself. If you need encouragement to meet your goals, save with a buddy or review with a trusted friend or family member. Seek professional advice if you feel you need more help. Remember, if you don’t meet your targets, don’t get discouraged. There’s always next month!