Budget for a year

A budget is a great idea, and will help you keep better control over your money, however, not every day, week, or month of your life is going to be the same, so a basic monthly budget may be difficult to stick to. So, the following are some great tips for how to create a yearly budget.

1. Input specific dates where you know you will spend more. This will be things like the holidays, birthdays, anniversaries, etc. Most people think that they are going to do a great job sticking to their budget, but then when December hits, and they have to buy Christmas presents. You can't give yourself the same amount to spend each month and expect to successfully stick to a budget because life is not uniform, there are going to be months where you go on vacations, or have a lot of family birthdays or something else that makes that month more expensive!

2. Figure out your income for the year, and subtract the amounts budgeted in the specific months. Now divide the rest by 12 to figure out how much you have left to divide equally between the months. In other words, give yourself a budget for Christmas, birthdays, a vacation, etc. and then figure out what you have left to divide out for the year based on your annual income.

3. Calculate your regular spending for the month. This is stuff like house payments, car payments, and other debt payments. In other words, figure out what your set costs are. This might include things like cell phone plans, or cable packages, but these are optional, so start with the debts and obligations that aren't, either because you have a loan for it, or because you have to have it (like somewhere to live). Now subtract this from the amount you have for each month left after you took out the big events.

4. Look at what you have left, and calculate average spending for a week, such as groceries, gas for your car, etc. and input it in monthly terms. In other words, look at how much money you have left each month, and divvy it out amongst the other things you spend money on. Now you have a budget you can stick to, every month.

A few reminders:
When creating your yearly budget, do not forget to budget for one time expenses, or annual expenses. These are usually things like insurance premiums, or HOA dues, or timeshare maintenance fees, club fees, etc. If you forget about them, where do you come up with the $400 or $4000 that they cost? It doesn't matter if they are small amounts, the money has to come from somewhere, so budget for it!

Make a copy of your budget, and keep it in plain sight. You have to remind yourself how much you have to spend, and that every dollar you earn has a place it needs to go, thus reckless spending is not an option.