Ah the budget. It all comes back to it, in the end. We're still tweaking ours, as new expenses arise and old expenses increase, or, less often, decrease. But all-in-all, we're making improvements.
B's mom inspired us to make one such improvement in taking our annual budgeting to the next step. Instead of having to pull money from our emergency fund for those once-a-year expenses we always forget about, we're going to have that money built into our monthly budget and set aside in a separate account waiting oh, so patiently to be used. Now, in addition to our checking account, income account, tax account, and emergency fund account, we're going to set up an "annual expenses" account.
This means that I'm going to sit down and come up with a list of annual expenses and the amount associated with each expense, add all of those expenses together, then divide the total number by 12, so we essentially create another "monthly payment" that goes into the annual expense account. So when we need $40 to take Pippin to the vet, it's already sitting in the account.
Here's a list of the annual expenses I've come up with for our home:
- Gas and Power Bill spikes. We noticed a $20 jump in our gas bill for January because of an unexpected polar vortex. I anticipate that we'll see that same spike in the summer months on the power bill. Estimating a similar spike 4 months a year = $80
- Tax Preparation. My parents use Turbotax, which may be more feasible and much less expensive for us next year, but with so many job jumps, combining our households, interest on loan payments, etc., we've opted to visit an actual agent this year = $200
- Visits to the Vet. Plus potential prescriptions or shots. = $38.95 for 1 annual visit (plus tax), plus $150
- Annual doctor's appointments. Co-pays, prescriptions, glasses/contacts, all predictable medical expenses.
- New clothes/shoes. We don't buy new clothes much, especially when B's work uniforms are all supplied by his employer. I always ask for gift cards for Christmas and holidays so I use that as my annual clothes and shoes budget. But, at some point, we'll need to replace B's work boots = $120 + tax/shipping
- Vacations/getaways. These are so important, but if we don't budget for them, they're not going to happen. I'm not sure if we'll have time to get around to 3 getaways, but for this year, I'd like to budget two weekend getaways at $100 and one anniversary getaway at $300 = $500
- Car repair and maintenance. This category is a bit trickier. A lot can go wrong with your car. We're going to stick to maintenance we know we'll have come up over the course of the year. That includes 4 oil changes per year per car (about $240), plus enough to replace one full set of tires (about $400) = $640.
- Renewing licenses. Okay, so having to renew your driver's license doesn't come up every year, but you have to update it if you move, and pay again so $20 each = $40
- Replace cell phones. I don't upgrade that often... What are phones going for these days? $300? I think I'll budget $200, for both of us and hope for the best.... = $200
- Gifts. Birthdays, anniversaries, Christmas/Hanukkah, etc. It's very difficult to plan for this far in advanced when you don't know what anyone will want for Christmas in December and it's MARCH now. But we'll plan a certain amount per gift per person and occasion, so call it $300.
Yeah sure, I wanted to include 2 visits to the vet, just in case, or a trip to the emergency room, that way the money is already there if we need it. But I had to remind myself that I haven't been to the emergency room since I was 7 (knock on wood). If a situation does arise, THAT is what the emergency fund is for, for unplanned visits that we don't have to budget for. So we'll plan for that 1 annual visit for the cat, since we know we'll need to take him. But that second what-if-something-happens visit? We'll Emergency Fund that, IF it happens. And we can always supplement these figures with blow budget, gift card budget, and unused grocery/gas budget.
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