These last couple of years have taught us a lot of things, one of which is that life can drastically change in the blink of an eye. And while you may not always be ready to face rainy days, being financially stable does make a difference.

As we’re about to step into a new year, here are some ways you can plan ahead for your expenses in 2022.

1. Categorise them according to needs & wants

We all know what needs and wants are. Needs are your basic necessities like food and shelter and wants are the things that help make your life comfortable, but aren’t essential.

When you get your salary at the end of the month, it can be tempting to want to spend on some fancy things. Now there’s absolutely nothing wrong with that, and if you’ve worked hard the whole month, you shouldn’t deprive yourself of a treat or two.

However, before swiping your card or hitting that ‘Pay Now’ button, think if you really need that item. If it’s something you don’t already have or something that needs an upgrade, go for it. But if it can wait, you probably could do without it…for now.

Some people even set a waiting period—10 days, 2 weeks, a month, etc.—before buying an item. By the end of that time frame, if they don’t feel like getting it anymore, it probably means that they dodged an impulse purchase. If you want to be super careful with parting with your hard-earned money, you can try this technique.

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Not only is this good for your wallet, it’ll also prevent you from cluttering your home with unnecessary stuff. But like we mentioned earlier, it’s okay to spoil yourself every now and then. So when budgeting, do set aside enough for this purpose as well.

2. Identify your fixed expenses

List down all the things that you have to pay every week or month such as your rent, phone or Wi-Fi bills, or car loan. Because these are fixed expenses, they should be at the top of your list when budgeting.

Related: 6 Ways to Lower Your Electricity Bill

Before you start allocating money for anything else, make sure you have enough to cover these first. The last thing you want is to have spent on other things without sufficient funds for your bills. Once you pay off your commitments, you’ll have more peace of mind to spend on other things.

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3. Prioritise the most crucial ones

Once you’ve noted all the items you know you have to pay each week or month, rearrange them by what needs to be paid off first. All of your fixed expenses may be equally important, but make note of any late payment charges that you may incur if you don’t pay up on time.

This might be common sense, but these extra expenses can be avoided as long as you settle your debts when they’re due. You definitely don’t want to have to part with more money, on top of the bills you already need to foot.

4. Use a budgeting app

Sure, in theory you might know how much to spend, how much to save and so on. But keeping track of your income and expenses can be quite tricky. To consolidate all of this in one place, you can use a free budgeting app.

Related: 10 Free Budgeting Apps That Can Help Track Your Expenses

These apps can even help you plan expenses with other family members, set realistic spending goals, caution you when you’re overspending and so on. Apps like Mint and Spendee will even give you monthly reports and assessments which can help you rework your spending plan for the next month if needed.

5. Set up an emergency/reserve fund

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Coming back to the whole point of being in uncertain times, you should always have a sum to carry yourself through rainy days. If you suddenly lose your job or get sick, that extra cash would serve as something to fall back on.

Dedicate a sum from your salary each month and put it in your emergency fund. It’s up to you to decide how much you want to contribute each month, but a rule of thumb is that you should have enough to cover at least 6 months of expenses. As much as possible, try to use your emergency fund only when it’s absolutely necessary. Other than that, it’s better to leave it untouched.

All in all, be clear about the items you are spending on and critically evaluate their importance. Most importantly, stick to your plans.