Finances In The New Year: What’s your Success Formula?
Today is officially the start of a New Year and for most that means the beginning of new goals but for us a new budget. For most debt and tackling personal finances will and should be their top priority when it comes to financial health in 2013. Nothing is getting cheaper and the average Canadian debt load is still at any all-time high. People are always emailing me asking “help me with my budget” and really it can be as easy or as difficult as you make it.
We have been using our family budget for the past 2 years and this year will be no different. The budget has taken us both by storm and helped us develop a lifestyle mindset that we hope others will grasp. Looking over our budget this year we realized that we would not have been able to save enough money to help us pay off our mortgage or accomplish some of the short-term goals without it.
What we did not do is accumulate debt something that is so hard for many people to do. I know when we quit smoking at the beginning of 2012 most of our family and friends were pessimistic about us succeeding. They thought we were set in our ways and in some part we almost believed that. The good news is we were not a bad sitcom on how to set yourself up to fail and we came out ahead.
The point is that even if you don’t have enough money to pay all your bills every month there is a light at the end of the tunnel. If you are negative before you start to budget or set any goals you will never and I repeat never succeed.
Earlier in 2012 I shared with you our budgeting series detailing how we designed our budget planner. We initially developed our budget on paper then transferred it to what we call the Canadian Budget Binder Spreadsheet which is an easy to use excel online budget. If you want a copy you can email me and tell me why you want to budget.
Related: Free Downloadable Money Saving Tools
Our Canadian budget binder template includes projected expenses (PE) which means we save every single month for items we know we will have to pay for at some point in the year. For this reason unless you save money for upcoming expenses you might not like our budget. So many people forget about these expenses and it may shock you but our monthly projected expenses as of Dec 2012 is a whopping $1257.39 up from Jan 2012 where we were saving $592.59.
What happened was as the year went on we started to realize more expenses that we pay for each year which we didn’t factor into the initial January PE. So for 2013 we will save in a separate account over the course of the year $16,386.36 to pay for items in our budget categories. This is one way we budget proof our finances making sure the money we need is waiting and ready when the bill comes in otherwise we have to pull from our savings account.
Our savings are not recognized each month until everything including projected expenses is paid and/or put aside. After we pay off the mortgage this year we will continue to grow our emergency savings back up to around 6-12 months of expenses. We also want to start major renovation projects on the house which will eat into those savings as we go along and are different from our home maintenance category.
We also noticed a decline in the use of coupons this year from $7428.81 in 2011 to $2727.94 in 2012. There comes a point where there are products that you have enough of so you move on. Our coupon binder was (we just emptied the binder of 2012 expired coupons) overflowing with coupons and we do use them when we find a great deal. Learning how to budget for groceries has been a learning curve but with the grocery game challenge we have been able to keep the budget at a steady pace.
Per month we will save $1365.53 in projected expenses x 12 = $16,386.36/yr
Additions or Adjustments to Our Family 2013 Budget :
- We forgot to input some receipts- How do we fix that problem? We will initial every receipt so we know it was actually put into the spreadsheet. We will then put the receipts in baggies then into our household binder.
- We need to label our receipt bags better so we will use a permanent marker.
- We needed to add a blog category.
- We wanted to add a stockpiling category for great deals so we weren’t blowing the grocery budget to bits. This will help us stock up on items that are an amazing deal and budgeting for groceries. If we don’t spend the $20 a month in this category it goes right to savings. We will not carry the money over.
- Many utility bills are going up and some will go up at some point in the year so what we knew was adjusted.
- We needed to adjust our grocery budget for 2 due to inflation and the proposed 3-5% increase in the cost of food. We also considered the average amount spent in 2012 which was more than the $190 per month. We ended at an avg of $223.76 per month. Keep in mind the grocery game did not start until early 2012. It has helped us stick to the budget especially when we know we are being held accountable for our spending.
- Birthdays increased as we added in a new addition to the family as well as buying cards and stamps for everyone.
- Christmas was updated to included Holiday Drinks, the new addition, cards and stamps.
- Vehicle Stickers– These are going up again in 2013 but we realized we were putting too much away so we lowered that by $1.00 a month
- Pet- Includes potential vet bills, food, licences as well as bird seed in the summer.
- Allowance– That went up because, well, I was spending a bit more than I thought I was. Time to cut back on the beer which I’ll admit has tasted mighty good this past year. Hopefully this will keep me in check but I’m hoping to lower it back down to $15 with some perseverance.
- Water– Good ol water bill is going up again in our city for 2013. They say water is the new oil so tap into all the water saving ideas that you can so you aren’t paying out the nose.
- E-test- with a new year brings higher prices so that was adjusted.
- Mortgage– Will be paid at some point in full this year but until then we will keep paying monthly. We do have the cash it’s just not all in one spot so it will take time to get it all out.
- Gas (vehicle)- One category that has a new budget cut. We budgeted more than we needed so we lowered this expense.
- Investments– Our investments will go up and I also will be looking at RRSP and other contributions with my advisor in early 2013. We are also hoping to drop our life insurance now that we will be one year smoke-free as of the end of January 2013.
- Property Taxes– We don’t know what our new taxes for 2013 will be yet but we will adjust as we need to.
Whether this will be the first time you use a budget or if you are a seasoned veteran then you know budgets can change from month to month. Make sure you return to your budget and check to see if any updates are needed. Taking control of your finances in the new year with a budget can equal your success formula but it’s up to you how you you want to walk the path to debt freedom.