How to Turn Last Year’s Budget-Busters Into This Year’s Gains

Looking for a way to transform your financial standing this year?

Turn last year’s biggest financial weaknesses into this year’s gain. Here’s how.

Use your annual budget data to plan against pitfalls.

Seeing the sum total of your spending for the year using Mint’s “Trends” tool can be your greatest asset in pinpointing the areas where little changes will result in major financial progress in 2014.

Let’s suppose you spent a grand total of $17,000 on food and dining in 2013, for example.

By vowing to reduce spending that category by 10% in 2014, you’re not just poised to bank about $1,700 that you can put towards emergency savings, retirement, or credit card debt, you have a game plan in place for the year to come.

When you know that you need to whittle $142 from your food and dining budget for each month in 2014, for example, you’re financially prepared to handle the times you know your budget goes askew, like over the holidays, and on vacations.

Instead of panicking the month your know your budget will take a beating, cut spending during other months of the year to make up the difference.

Put a cost to procrastination.

Even the best budgeters usually have one or two areas where they could make some improvements, but when it takes effort to make the changes procrastination tends to set in.

The problem?

Delaying the chance to eliminate expenses you don’t need costs you money that could be put to better use elsewhere.

Whether your budget buster is failing to cancel a rarely-used gym membership or unnecessary premium cable channels, or not shopping around for better deals on car or home insurance, Mint’s spending graph sorted by “Merchant” for 2013  can put a number  behind the cost of your procrastination, giving you the motivation you need to finally put a stop to wasteful expenses.

Transform your temptations.

Whatever your financial vice, it can be transformed into the catalyst that gives you more financial control.

If impulsive spending busted your budget last year, Shannon K.Weaver, the president of Mission Financial Planning suggests channeling that tendency for the better.

“Instead, be impulsive about paying down your credit card bills rather than waiting until the due date. Early and/or multiple payments mean reduced interest expenses, and a quicker pay-down,” says Weaver.

(Because creditors report balances to the bureaus at the close of the statement cycle, which is a few weeks before the due date, paying your credit card bills early can also help you reduce your debt utilization ratio, which is a key factor in how your credit score is calculated).

If you have a tendency to abandon your budget completely after one or two missteps, on the other hand, your avoidance tendency can also be turned into a positive behavior.

Automate contributions to retirement accounts, emergency savings, and future college funds directly from your paycheck to ensure that you can’t abandon your financial goals, despite your temptation.

Get paid for your spending.

If you’re confident that you can use credit responsibly leverage your budget busters to earn cash back credit card rewards or a statement credit, particularly if you spend a disproportionate amount of your budget on costs related to groceries, fuel, or travel.

(Depending on the credit card you choose, some cards also offer added value in the form of car rental insurance coverage, and traveler’s insurance).

When you do veer from your budget, Christina Povenmire, CFP, owner of CMP Financial Planning suggests another way to benefit.

“Make a rule: Every time you give in [and bust your budget], you make a $3 contribution to your savings account.” Over time, every little bit you contribute adds up.

Eventually, you may feel more empowered about your ability to control your money and the decisions you make in regards to managing it.

Ensure that your home remains an investment.

If you were among the Americans who spent more than $550 billion on home improvement projects in 2013 according to the Joint Center for Housing Studies of Harvard University, make sure that your housing budget works to your advantage.

For both homeowners and renters, John Bodrozic of HomeZada.com suggests taking a home inventory to arrive at an accurate value of your possessions.

Once you determine the figure, make any necessary adjustments to your homeowner or renter insurance coverage.

As you build your 2014 budget, he also suggests creating a basic a property maintenance calendar.

Not only will this allow you to project realistic maintenance expenses, you’ll reduce the likelihood that you’ll face unexpected costly repairs, especially during the height of summer or winter, when service professionals are in high demand and charge a premium.

Further, setting a schedule for the maintenance of your major home appliances and systems like refrigerators, heating and cooling units and hot water tanks can reduce your monthly utility bills, and help to maintain the value of the home.

If you have room in your budget for bigger improvement projects, Bodrozic suggests taking before and after photos, and organizing all purchase-related documents and receipts for tax and re-sale purposes.

Stephanie Taylor Christensen is a former financial services marketer based in Columbus, OH. The founder of Wellness On Less, she also writes on small business, consumer interest, wellness, career and personal finance topics.