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By Randell Tiongson

It’s 2013 and another year has passed us. Like many, we now resort to writing our New Year’s resolutions, our faith goals or New Year objectives and that’s a great thing. It is always a good idea to start the year knowing what your objectives and depending on what those goals are, it should help keep you on track.

Other than knowing what your objectives are, it is also wise to start things right. In personal financial planning, we always look at things from two perspectives – your objectives (where you want to go) and your starting point (where you are right now). While fixing your eyes to the future is an awesome idea, knowing where you are right now is just as important.

The best way to start 2013 or any year for that matter is to start on a working budget. It is a great idea to put a name on everything that you spend on and write it on a sheet of paper (or excel). There are expenses that are recurring such as rent, amortizations, food, transportation, etc. There are expenses that are may also be recurring but are not necessary. It is prudent to list down expenses that are ‘needs’, those expenses that you can’t do without. It is also important to list down those ‘wants’ so you can see if you are already spending too much on it.

Your budget should be a positive one; it should reflect some savings which you should use for investments for the future. While situations differ from one to another, we should strive to keep living within our budgets. If your expenses are too close to your income or worse, exceed it, there are two things you should do: earn more money, spend less money.

Everyone wants to earn more money right? But this statement is easier said than done. Don’t despair because if you truly invest on yourself by improving your competence, you will begin earning better. You might also consider being a bit entrepreneurial and start a small business or do some buying on selling on the side. Though it might take time, you can begin earning more than what you are doing today if you do the right things today.

Here’s something everyone can do: spend less money! The reason why I recommended that you identify some of your expenses as ‘wants’ is because you may have to cut down on some of them so you will have that desired positive cash flow. Cutting down on your wants will give you more savings and those savings can grow into wealth once you learn how to invest properly, a topic for another day.

Start 2013 right by working on your budget; plan, prepare and enjoy the year without the stress.

“But don’t begin until you count the cost. For who would begin construction of a building without first calculating the cost to see if there is enough money to finish it? Otherwise, you might complete only the foundation before running out of money, and then everyone would laugh at you. They would say, ‘There’s the person who started that building and couldn’t afford to finish it!’ – Luke 14:28-30, NLT

Randell Tiongson is an advocate of Life & Personal Finance. He is a Director of the Registered Financial Planner Institute (Phils.) and has 25 years experience in the financial services industry. He is also a columnist for the Philippine Daily Inquirer and Moneysense magazine and appears as resource persona to various networks. For speaking engagements, financial planning, training and consultancy, send an e-mail to randell@randelltiongson.com. To read his personal finance blogs, visit http://www.randelltiongson.com/.