Love doesn’t cost a thing, but not many other things are free. Don’t let the month of love blind you to expenses coming at you in the rest of the year. Now is the time to budget for the months ahead.
Many of us find it tricky to budget for the month ahead, let alone the year. Fortunately, as with most things, if you follow a handful of steps you can do it.
- Get yourself a big piece of paper and draw blocks on it, one for every month until the end of the year. You can also do this on your computer if you want.
- Start with the things you know. In every block, write down birthdays and anniversaries, holidays and celebrations, such as religious and cultural holidays, and other landmark events, such as the start and end of school holidays and your planned family vacation. The idea is to write down all those things that happen every year and for which you can plan. You should never be surprised by any of them!
- Now add things that aren’t regular events, but that you know will or need to happen. This might be a medical procedure, such as an operation, getting new glasses or having your teeth fixed. It could be something to do with your house, eg, replacing the fridge or doing roof repairs. Maybe your car will need new tyres or a service soon. You can also add new winter or summer clothes for growing children (try to schedule this shopping at the end of the season when the shops have sales).
- The next step is to give each item an estimated amount (even better if you know exactly what something will cost or how much you want to spend) for planning purposes. It will be useful to do some research for expenses such as car tyres or household appliances. You might find special offers that influence where you slot something into your overall plan.
- Add up the amounts in every month’s block. This shows you, more or less, how much you will need in addition to your usual monthly budget.
- Now, take a deep breath. Chances are that the amounts in the blocks will make you feel like running away. Where on earth will you get all that money? The good news is that you don’t need all the money at the same time. The even better news is now that you have a good idea of what lies ahead, you can plan for it. Of course there will be unforeseen expenses, but there will be fewer of them because you are thinking ahead. And because you are thinking ahead, you will have savings and an emergency fund to help you out.
- If you worry that the year is going to be too expensive for you, think about each item in each block carefully. What will happen if you don’t buy a new fridge? Can you spend less on birthday presents and parties than in the past? Discuss your options with your partner, family members or friends if necessary.
- The final step is to work your planned expenses into your monthly budget. Are you saving enough to pay for things when you need to, or do you need to relook your monthly spending?
Remember that expense tracking is the best way to understand where your money is going and to redirect it towards your financial goals.
- Keep your year plan where you can see it and keep working with it as the year unfolds, adding and deleting events and expenses as necessary. You can also work with a running budget by, for example, adding February 2024 to your chart as soon as February 2023 is over. This will help you to always keep the future in mind.
- Always, always congratulate yourself and celebrate every time you meet your obligations without hassle because you had a plan.