New Year’s resolutions often are made at the end of one year and the beginning of the next. These resolutions are simply promises or goals to do something different. The process of identifying areas of our lives that would benefit from some change is a positive one.

Concern about the U.S. economy is front and center with the electorate. The election results verified the majority of Americans wanted more accountability and fiscal responsibility at the national level.

With the national debt at $36 trillion, according to the Truth in Accounting website and not including the total unfunded Social Security and Medicare promises, no wonder Americans are concerned about an unsustainable debt and the resulting inflation because of printing money to cover the debt.

The national debt may seem far removed from the lives of each citizen, but what about the debt within individual households? The latest data from the New York Fed’s Consumer Credit Panel reveals the debt held by individuals is $17.94 trillion and growing daily.

“The average American debt (per U.S. adult) is $66,772. Seventy-seven percent of American households have at least some types of debt,” according to the Ramsey Solutions website posted in September 2024.

How can the spiraling individual debt be reduced? Haleigh Wilson on June 14, 2024, on The Lantern Network wrote, “Budgeting Basics: Creating Your First Budget,” explaining the purpose of budgeting and the steps to basic budgeting. She emphasized budgeting is more than just a tool for managing your finances; it is a cornerstone of financial literacy that empowers you to take control of your money and make informed decisions.

Wilson identified advantages of the budgeting process. Budgeting fosters financial awareness by providing insights into your income, expenses and spending habits. A budget serves as a roadmap for achieving your financial goals and aspirations. If an individual has indebtedness, a budget helps to adequately allocate funds toward debt repayment. A key benefit from budgeting is emergency preparedness, which results in less stress and improved mental health.

Michael Knisley said, “A budget acts like a matchmaker. It introduces this end (your expenses) to that end (your income) and makes those ends meet.”

In his September 2024 article, “7 Reasons You Should Budget,” Knisley listed tips for making a budget work: Know the difference between luxuries and necessities; be aware that the little stuff can add up fast; exercise will power; and use cash rather than credit cards whenever you can.

For any New Year’s Resolution to be effective, taking the first step is critical. Creating a budget is no different. Haleigh Wilson on The Lantern Network identified the basics for budget creation:

• Determine your income: Start by calculating your total monthly income from all sources, including wages, salaries, freelance work and any additional sources of revenue.
• Track your expenses: Keep track of your monthly expenses by categorizing them into fixed expenses (such as rent/house payment, utilities, insurance) and variable expenses (such as groceries, entertainment and transportation).
• Identify your financial goals: Set specific, measurable, achievable, relevant and time-bound financial goals (SMART).
• Allocate your funds toward different categories based on your priorities.
• Monitor and adjust as you regularly review your budget and track your spending to meet your goals.

A financial plan or budget provides a vision for working toward your goals. Accountability is the key to being successful in reaching goals. Adhering to a budget requires the accountability pieces to be in place. These include being self-aware, observing and admitting mistakes and accepting the responsibilities and consequences for not following the financial plan you created.

The newly elected U.S. president has promised fiscal responsibility in the federal budget. He is appointing people with the expertise to examine the budget and to identify fraud, waste and abuse. The American people have a duty to hold elected politicians accountable for keeping those promises.

Creating and following a budget is critical not only for success at the national level, but also for each individual. Resolve to be empowered. Hold yourself accountable. Take charge of your financial life.

Here’s to a fiscally sound New Year.