Your Best Year Ever
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What's that? Are you telling me you have no clue what you've spent all your money on?
Are you saying you have no intention of planning the new year right now?
I know you are busy. We all have so much to do.
Somehow the house seams to mess itself and the kids are in overdrive post - holidays.
Despite all that, you need to do this for yourself. You need to do this for your entire family. Planning will pay bigger rewards in the coming year than any brightly wrapped package you will ever open.
If you have been keeping track of your money all year, all you need to do is total all spending by category. Tally each class of expense and then figure the percentage of the total that each represents.
Analyze how much difference there is from budgeted to actual spending. If you spent less than budgeted in any one classification, then you can adjust the amount for next year.
Give some thought to those areas you've overspent your budget in. Don't just jump the amount for meals out to match your spending patterns. Instead, look at each overage objectively. Could you do better than you have with some simple changes?
Has your savings account grown or has it been a temporary resting spot before you spend your dollars? Has your debt level decreased or grown? Try to do this with some detachment. The idea is to examine your year in detail, not to beat yourself up over your mistakes.
Take my hand, now, we are going to plan for next year. We need some guidelines, of course, for those of you that have never planned or budgeted.
A typical family will spend their income in roughly the following percentages: Food 12%, Housing 16%, Utilities 6%, Clothing 5%, Health Care 5%, Transportation 15%, Entertainment 5%, Personal Care 1%, Personal Insurances and Retirement 9%, Education 2%, Charitable Giving 3%, Savings 5%, and Taxes 16%.
Don't panic if you haven't met this exact mold. Every situation is unique. I only give the guidelines for those that are only now starting to budget. You will be able to compute the total income anticipated in the coming year and the corresponding percentages for each expense. From this, divide by twelve and you will have a monthly guide.
Only when you have a road map familiar to you can you start to try out the little side roads. In English, that means you have to try the guidelines for a couple few months before you make any adjustments to your spending and savings plan. But you can start to control your spending immediately.
Eventually, we will be aiming to fall under each percentage for spending and increase the savings categories. If you can spend 2% less on food, you can increase savings by that amount.
Pay very careful attention to the taxes you pay. Most people don't. Only when you add up the income taxes, taxes on fuel, sales tax, fees you pay to the DMV, etc, etc, etc will you realize how much they effect you.
As an aside, I would love to be personally responsible for a civic reawakening. Do you realize that most town, school and county board meetings take place with few people in the audience?
Lots of people grumble when they receive their tax bills, but don't bother to come to the budget workshops. If you don't participate, how can your elected representatives actually represent you? They think they are doing a wonderful job, because no one comes to their meetings to tell them any different.
I'll get off the soap box now. Sorry, I am often one of those people at the meetings.
I hope you will start now and make this year your best year yet. Don't be afraid to e-mail me with questions or for advice. If I can't help you I have a long list of people I can refer you to.
Be sure to send your questions or comments on tightwaddery to kjl3991@yahoo.com.
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