YearlyBudget

Start Meeting Your Money Goals with a Yearly Budget Plan

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What if you could set yourself up to meet all of your financial needs and wants for the entire year?

When people think of budgeting, they typically think of a monthly budget. And while the monthly budget is a useful tool for many, over the years I realized there was something missing from it.  

I kept finding myself overspending each month and therefore I wasn’t able to meet my savings goals.  Saving money was an afterthought and unplanned expenses kept popping up.

What I finally realized is that my monthly budget missed the big picture. It focused only on a single month, which often forgets those pesky non-monthly expenses and long-term money goals. 

And that is when I developed my own yearly budget. 

My yearly budget includes all of my expenses that pop up throughout the year as well as my long-term savings goals. It helps me see the big picture of my finances while helping me make sure that I have enough money throughout the year for both my needs and the things that are important to me. 

The good news is that it is not hard to create your very own yearly budget. And when you do, it will guide your money decisions throughout the year to help you reach your money goals. 

What is a Yearly Budget?

A yearly budget is an overview of all of your true expenses and savings goals for the entire year. 

It will include not only your monthly expenses but also your savings goals and your non-monthly expenses such as car maintenance and annual subscriptions. 

By including all of your annual expenses and savings goals, a yearly budget will be your guide to help you make intentional money choices throughout the year. 

Why You Need a Yearly Budget

A Yearly Budget Helps you Identify and Plan for ALL of Your Expenses

According to Creditcards.com, one of the reasons budgets fail is that they don’t account for the unexpected expenses. 

And this is definitely one of the reasons my past budgets have failed. 

Expenses like my Pearl Jam Fan Club annual membership (proud member since 2000), car repairs, and health care costs would often catch me by surprise. These are the types of expenses we don’t receive a bill for each month, so they are easily forgotten and, as a result, can ruin our monthly budgets.

But if you take the time to create a yearly budget, these “unexpected costs” will be uncovered and you will start to plan for them. 

A Yearly Budget Helps You Meet Your Savings Goals

We all have things we want to save up for, but so often we fail to meet those savings goals. This is because we treat them as an afterthought – something we do with the money left over from paying our bills.

Creating a yearly budget plan helps you make your savings goals a priority. And it’s only when you make them a priority that you will start to finally reach your savings goals

When you consider your savings goals as part of your yearly budget, they will become as important as paying your bills. And, in turn, you will start to see those savings buckets get filled. 

A Yearly Budget Helps You Spend On Only What Is Important to You

By viewing your finances in terms of an entire year, you are able to see the big picture. And with this big picture in front of you, you will start using your money for the things that are important to you and let go of the things that are not.

This happens because you only have so much money to go around, and your big picture will show you that every spending choice has a trade-off. 

For example, you may look at your yearly budget and see that you don’t have enough money budgeted to take that vacation you wanted. But you really want to go on that vacation. 

Now you’re able to look at your entire annual budget to see what expenditures you can cut back on to fund that vacation. 

A Yearly Budget Helps You Create a Realistic Monthly Budget You Can Stick With

Once you have your yearly budget created, you will be able to use this information to determine your monthly budget. And this is the one monthly budget that you will be able to stick with. 

This is because your new monthly budget will include ALL of the true monthly expenses you identified in your yearly budget. And by including your true monthly expenses in your monthly budget, sticking to it becomes realistically achievable. 

By using your yearly budget as a guide, your monthly budget will include both your monthly expenses (rent, groceries, etc) and the money you need to set aside each month to cover those pesky non-monthly expenses (membership fees, insurance premiums, etc). 

Doing this will help eliminate those surprise expenses that can often cause you to go over your monthly budget.

How to Create a Yearly Budget

1. Create a Yearly Budget Plan Worksheet

Using either a spreadsheet or pencil and notebook, create a yearly budget worksheet. This worksheet should allow you to record your net income and all of your expenses throughout the year.

Or you can download the spreadsheet I use to get you started.

2. Determine Your Net Income

Figure out the amount of your yearly net income. This is the income that you take home with you after taxes and other deductions have been taken out. 

If you have variable income, do your best to forecast your net income for the year.

3. List Your Fixed Expenses

Fixed expenses are all of the bills you receive each year.  

Examples include things like:

  • Mortgage/rent
  • Utility bills
  • Gym memberships
  • Subscription fees
  • Insurance premiums
  • Debt repayment
  • Property tax

Remember that some of them are monthly bills, while others may be quarterly, bi-annual, or maybe annual. 

4. List Your Variable Expenses

Variable expenses are the expenses that you may not spend money on each month or ones where the amount you spend fluctuates each month. 

These are expenses such as:

  • Groceries
  • Clothes
  • Car Maintenance
  • Spending money/Fun Money
  • Pet supplies/medical care
  • Donations

5. List The Unexpected Expenses that Could Occur

These are the expenses we don’t want to think about. But it’s crucial we include these in our yearly budget as it’s these expenses that often cause us to go over our planned budget which could even lead to taking on debt. 

Think about what could go wrong throughout the year financially and plan to set money aside each month to cover these unexpected expenses. 

Plan for things like:

  • Car repairs
  • Home or appliance repairs
  • Health care co-pays/deductibles

You can include all of these unexpected expenses into an emergency fund if you want to or have individual sinking funds for each. 

If you are having difficulty thinking of all of your spending categories, check out this list of budget categories and expenses to get your brain thinking.

6. List Your Savings Goals

We want to make savings a priority, so including them in your yearly budget is essential. Your savings goals are the things you want to save up for so you don’t have to take on debt or can take that dream vacation. 

Examples of savings goals are:

  • House downpayment
  • New/Used Car
  • Home Improvements
  • Retirement

7. Forecast the Total Yearly Cost of Each Expense

For each expense listed, assign a cost for each. Some regular monthly expenses like your bills will be easy, but you will just have to estimate for others. If you are unsure of the amount to enter, take your best guess and err on the high side.

To figure out your yearly cost, you’ll have to do a little math to convert your monthly and variable costs into yearly totals.  

8. Add Up Your Expenses

Take the forecasted yearly cost of each of your estimated expenses and add them all together. This is your yearly expenditure. 

9. Make Necessary Adjustments

Make sure your expenditures do not exceed your income.

If after adding together all of your expenses you find that they do exceed your annual income, you’ll have to review your expenses and determine where cuts can be made.

Or if you find you have more annual income than your total expenses, you can increase your savings goals or add a new expense to your budget. 

10. Create a Monthly Budget Based On Your Yearly Budget

Your yearly budget is your map to help you see the path towards achieving your financial goals. 

Your monthly budget is made up of the individual journeys you will take throughout the year that actually move you towards meeting your financial goals.  

To create your monthly budget, take each yearly expense and divide it by 12.

This will reveal your true monthly expenses, which is the amount you will either spend or set aside each month to cover each yearly expense and savings goal. 

You Got This

Your yearly budget is a valuable tool that will help you to avoid those unexpected expenses, and therefore help you reach your financial goals. 

By creating one, you will be able to see beyond just a single month of your finances. And with this big picture of your finances in mind, you will make intentional spending and saving choices throughout the year.

So if you’ve been struggling with your monthly budget or simply want to start rocking it when it comes to your financial goals, then take the time today to create your own yearly budget.

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2 Responses

  1. We had a similar experience. The yearly look captured our true expenses (and opportunities) much better than a monthly attempt. We don’t budget tightly anymore, but a yearly anti-budget was key to our goals.

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Picture of Melody Creator of Cash for Tacos

Hi! I’m Melody and I want to help you create a vision for your life and provide you the necessary tools to use your money to make your vision a reality. 

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