My husband and I have been debt free except our mortgage since
June 15, 2011. We have always had a budget in place;
however, it was extremely flexible (or what I like to call: willie-nillie). If we went over budget in one area, we took
from another. Unfortunately, what
suffered the most with this way of budgeting was our savings account and
long-term savings goals.
I think I may be the natural saver in our relationship because I always felt we werent saving enough to meet our long-term savings goals. To help rid of the anxiety I was experiencing about the (lack of) money we were putting into savings, I decided to try a new way of consistently saving money.
What I did was write down our yearly expenses and our yearly financial goals. After I totaled up that number, I divided it by our yearly after-tax income. This was pretty easy to do for us because we get paid the same amount each payperiod except for the extra week’s pay a few times a year (which I did not include in our yearly income number).
Our numbers looked a little something like this*:
- Trash Pickup (Quarterly) - $50 x 4 -$200/year
- Property Tax (Bi-Yearly) - $650 x 2 - $1300/year
- Home Owner’s Insurance / Car Insurance - $1400/year
- Septic Inspection & Maintenance Contracts - $300/year
- Terminex - $250/year
- Propane - $1500/year
- Total: Approximately $5000
- Home Improvement Fund - $2,500
- Replacement Vehicle Fund / Car Maintenance - $2,500
- Roth IRA Accounts - $2,000 x 2 - $4,000/total
- Vacation Fund - $1,000
- Total: $10,000
Luckily, I have a husband who is willing to go along with whatever I want to try, so I began to implement this new way of saving the first week in August. To date, this has worked well for us!
When we get paid (hubby gets paid every Friday, I get paid the 15th & 30th), I immediately transfer 40% of our income into our
Direct account, I have the following savings accounts set up:
- Emergency Fund
- Yearly Expenses
- Vehicle / Maintenance
- Home Improvement
- Roth IRA
- Rainy Day
With this way of budgeting, I now have peace of mind that we are saving an adequate amount of money, and Todd has peace of mind that I will not hoard all of our income into savings!
How do you budget for your yearly expenses and savings goals?
*These are not our true numbers, but are being used as an example to show how we are now “budgeting” for our yearly expenses and goals.