Many families create weekly or monthly budgets, but still find themselves in a bind when forgotten expenses or “surprises” crop up. That’s why an annual budget is the smart way to plan your finances. Planning this far ahead will help you think big picture and itemize all the expenses you anticipate for the year (and leave some wiggle room for the ones you don’t).

Just as you would for a business, this is a great time to set up a meeting with your family to plan the 2018 budget – but unlike a business, this one is all about your own financial future! Here are some expenses to consider when creating your yearly budget.

Keep your eye on the goal

Hashing out your family’s goals is the best place to start. This will shape your entire budget, trickling down into how you prioritize spending in every category.

Some goals may be more short-term, such as saving for a vacation, a down payment or a new car. Or, they could be lifelong goals like investing in retirement or growing your savings account. Decide on the most important things you want to accomplish next year financially, and your budget will be the roadmap to make it happen.

Expected expenses

Take a look at your spending patterns from this year to help you project what you’ll spend next year. Then, add up your average monthly costs on ordinary expenses, like insurance, mortgage payment, utilities and charitable giving. Weekly expenses such as groceries, gas and incidentals should also be considered, and examining your past expenditures in these categories will give you a frame of reference for the year ahead.

You may even find some areas to trim your spending.

Oh, and don’t forget about these expenses that may not occur every month:

  • Auto Insurance
  • School tuition
  • HOA fees
  • Car registration renewals
  • Oil changes
  • Termite protection
  • Holiday spending
When things go wrong

When creating a budget, many people take the “nah, I’m good” approach and skip over the unglamorous expenses like car or home repair. Unfortunately, this attitude isn’t always an option when a rainy day actually hits.

You can be proactive by adding a line item in your budget for emergency reserves each month. Think of it as a coin jar you can use when things go wrong, and when you reach for the money, it’ll be there.

Freedom to be fun

Not all financial surprises are bad. Leave a little room for spontaneity in your budget; this might be entertainment-related if you love concerts, festivals or date nights, or it might take care of things like babysitting or pet care for a quick getaway.

This fund could also contribute to buying gifts for birthdays, holiday shopping or treating yourself. Accrue savings each month just as you would for an emergency fund, and scale the amount set aside so it doesn’t eclipse your other expenses.

Budgeting for an entire year may seem intimidating, but doing so helps you ensure you have the funds for what you want most, like pizza night, summer camps, dates and a vacation.




About the Author:

Megen Robbins

Megen Robbins is a contributing author to the Movement Blog, and has been a business writer for more than five years. She can't really remember what she majored in (public relations, FYI) or where she went to college (it was Auburn University), because having two children under age two removed most of her brain cells. Oddly, this also gave her the uncanny ability to string words together in ways that are playful and engaging enough to hold the attention span of just about anybody (including toddlers). When she’s not day-dreaming about alone time, Megen can be found volunteering at her church youth group.