Now that you’ve mastered your monthly budget (right?), we’re going to look at making a yearly budget. The good news about this budget is that some studies show that people who make a yearly budget have an even better grasp on their finances, since random payments that spring up throughout the year are accounted for, you’re not left scrambling to make ends meet. This is also what makes up your reserve account that was mentioned in the monthly budget sheet.
The less good news is that it will probably take you a little longer to complete. You need to brainstorm a little and make sure that you’ve covered every area. If you can find old bills to make sure you’re accurate with the amount, that’s great, but if you can’t, just make an educated guess.
I’ve broken down my expenses into different categories like home & yard (not a big one for me), car, health, vacation, gifts & parties, school, pet and misc. Since I don’t have a pet (although I’m dying to get a rabbit) and I’m no longer in school, those categories don’t really apply to me.
However, the car section certainly does. My car takes up more money than I’d ever even thought possible (it doesn’t help that I drive all over the country every week either). So to account for how much money I need for the year for my car, I’d estimate the oil changes (which is like 1 a month), expected car maintenance (I like to keep it at about $200, because of all the miles I put on Mona – yeah, that’s her name – but I imagine that most people with relatively new cars could halve that). Registration, because for some reason, you have to keep paying for your car each year. I mean, really? Calling it registration is so bogus to me. It should stay registered from the first time I do it – what are you doing with these records DMV? Just call it what it is – taking my money cause the government can. That’s actually less offensive to me. Ugh. Sorry. Rant over. Every couple of years I have to factor in a driver’s license renewal free as well, and yearly I have my car insurance payment and some of you may also have AAA as well.
In the vacation section, I try to account for all expenses for all my trips for the year. From crazy splurges to go climb Machu Picchu in Peru (which was awesome and worth every penny) to just getting home for the holidays to weekend roadtrips to somewhere pretty, this is the place to account for it.
Another gigantic money suck is gifts and parties. Try to set a budget for your gift giving for the upcoming year. Are any friends or family getting married or graduating? Those expenses can add up. Were you asked to be a bridesmaid? Because those expenses add up realllllll quick. I hear the gentlemen get off a little better, but I’m sure there’s still some expense to being a groomsman (Disclaimer: I love the friends I’ve agreed to be a bridesmaid for – so I’m not super complaining about the price here – only noting that there definitely is a pretty hefty one). Also, are you planning on hosting a party for New Years or 4th of July or Arbor Day? Estimate the expense and list it in this section.
Lastly, check out the miscellaneous section and see if any of those charges apply to you. At the end of each column, total up the amount for the year and then break it down into monthly savings. Add up the monthly savings for each and you’ll have an idea of how much you should be contributing to your reserve bank account each month. If you fall behind, you can also reassess whether you can alter those budgets. Maybe instead of gift cards, everyone gets homemade cookies for Christmas (or any of the other 80,000,000,000 DIY idea on Pinterest). Maybe you scale back from a cruise in the Med this year to camping for the week.
And for more great advice on how to set up a yearly budget, check out my free giveaway of Judy Lawrence’s The Budget Kit. Ends October 31.
You can also download a copy of my Yearly Budget form here.
brokeGIRLrich readers, what would you add to your yearly budget form that I’ve forgotten? What was the best DIY gift you’ve ever received?