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The New Year has arrived!  Even though I don’t set resolutions, I do have some January traditions that I really look forward to.  The most important one, in my opinion, is the process of setting the annual budget for our household.  Yes, I honestly look forward to it! One of the many benefits of figuring out your money is that it starts to become a fun thing to work with.  

Planning out all of the major expenditures for the year gives me a few important things:

  • Excitement:  It reminds me of all of the exciting experiences I have to look forward to, as I start to think about the funds to allocate to each.  

  • Gratitude:  As I plan out each month of the year, I’m often overwhelmed with gratitude for where I am financially and the opportunities it affords me, and that my partner and I are (almost!) always on the same team with how we use our money.  

  • Challenge:  I don’t have a secret grove of money trees at my disposal, so I have to make choices.  I see the budgeting process as a fun game where I make decisions to maximize the value I get from everything I allocate money to.  Switching my attitude from one of lack to one of perpetual abundance was probably THE most significant mindset shift I’ve ever made when it comes to my money.  

So, now that you’ve obviously been convinced of why budgets are easily the most exciting and rewarding thing you can do in January, I wanted to share the categories I use for my family, along with thrilling commentary. My hope is that if you don’t budget already, you might consider giving it a try.  And if you do budget, perhaps comparing to our categories will remind you of some areas that can trip you up if you don’t plan for them.

  • Mortgage and HOA:  We pay our mortgage biweekly and we aggressively round up the payments, which ultimately is enabling us to pay off our 15-year mortgage in 10 years, saving tens of thousands of dollars in interest in the process!  We also scrutinize the HOA financials and plan to be actively involved in its management as we acclimate to our new community.

  • Cell phones:  Not a lot of tricks to this one besides periodically contacting your provider to ask about ways to lower your rates.  We found in the past that we were paying for services we didn’t need, and more data than we ever used.  Also, don’t “upgrade” your phone unless it’s actually free to do so.  A lot of times you trade in a perfectly good phone for an “upgrade” and the cost just gets rolled into your monthly payment as a hidden loan, when you could have just kept using your original phone.  Don’t be fooled!

  • Utilities:  Our biggest trick here is keeping our house at 63 degrees during the winter (and wearing sweaters when we need to…we do turn it up when we know we’re having company because we get that that’s pretty chilly for most people and we are good hosts!), as well as holding off on air conditioning until it’s absolutely necessary in the summers.  This saves us literally thousands of dollars per year, and we don’t feel like we’re suffering at all.  I know roughly what our utility bills are for each month and how they fluctuate with the seasons, and it’s an easy thing to calculate for yourself.  Don’t blow your budget because you didn’t account for seasonal changes.

  • Car Payment, gas and maintenance:  We own one car outright, and the other has a very low-interest loan that we pay consistently.  There are widely varying schools of thought on buying vs. leasing, new vs. used, etc. and we lean towards buying new and then keeping those cars for a long time.  We don’t budget to the penny for gas and maintenance but we know roughly the cadence for those things, and gas for road trips comes out of the entertainment budget (see below).

  • Student Loan:  We’re considering knocking this one out in full this year with only a few hundred dollars left to pay, but at a 0.07% interest rate, there’s pretty much no incentive to do so. Consider consolidating your student loans at a lower rate – it is free to look for alternate providers (same with car payments!).

  • Entertainment:  For us this includes internet, a Netflix subscription, Amazon Prime, and date nights.  We minimize date night expenditures by optimizing credit card points, asking for gift cards to restaurants for gift-giving occasions (we value togetherness and consumables over material things!), and minimizing alcohol / opting for BYOB options usually.

  • Groceries:  Food is food, but in general you can optimize here by going for simple meals you can cook at home, and avoiding lazy pre-packaged stuff. It takes only a few minutes to chop up vegetables, and you’ll pay a lot more to have someone else do it for you. One big area where we made changes was with meat consumption – it’s far and away the most expensive source of protein, and American portions are pretty nuts compared to the rest of the world.  Once we got real about protein portions, we physically felt much better and had a lot more energy.  Eat lots of plants, and your body and wallet will thank you!  We also keep it local and organic by sourcing a lot of our veggies from a regional co-op, which may be an option for you!

  • Household goods:  We don’t have a separate line item for this to be honest, but we lump it into our grocery budget as we’re often buying paper products and toothpaste in the same stores we buy our food! Simpler is better for us.

  • Pets:  We buy dog food in bulk and we allocate money for toys, treats and the annual vet trip each year.  We had two “emergency” vet visits in 2016, but rather than budget for them in this category, we covered it from the residual buffer / savings we have at the end of each month.  Fortunately both trips required only minor intervention, but we were relieved to know that if we needed to do something more major for our fur babies, we would be able to cover the costs.

  • Savings for major events:  This year we are are taking a 20-day trip to Africa, attending weddings, bridal showers and bachelorette parties all over the country, going camping, and traveling to visit family for holidays.  Rather than just winging it when we get to it, we set the plan early in the year and budget for it.  The buffer ensures there are no surprises when the time comes.  What major events do you want to incorporate this year?  Make sure you budget for them now!

  • Gifts:  I talked extensively about the churn of consumerism at Christmas, but I still love giving gifts.  I plan for gifts for birthdays for close friends and family, as well as a modest buffer at Christmas.  We opt for gifting events over material items in our family, and find more value in that. Consider what you find the most value in and how you like to express yourself, and honor that if and when you decide to designate a gift budget.

  • Charity:  We set aside money during the year to give to organizations we see making a big impact in the world, and we track our donations so that we are taxed appropriately at year-end. I’ll write a separate post about charitable giving, so stay tuned!

  • Things we don’t budget for:  

    • Clothing.  We’re not big on recreational shopping, so when we need something, we buy it.  Because we optimize all of the categories above, we have always had enough left over to cover any time we need a new pair of jeans, hiking boots, whatever.  Buy things you need and don’t buy things you don’t need – it’s not complicated.

    • Personal upkeep.  I don’t have a separate budget for skin care products, makeup, haircuts, accessories or anything else.  I have a good rhythm with my skin care routine, I don’t wear a ton of makeup all the time, and I just buy what I need when I need it!  I don’t do anything fancy with my hair either – to me it’s a waste of time but if it’s something you find value in, then please do plan for it because those visits add up!

    • Bonuses, Raises and Refunds:  We don’t make adjustments for projected income boosts in the form of tax returns, pay increases or performance bonuses.  When they come up every year, they go into our savings account. End of discussion!  We don’t speculate about what they might be, or try to allocate money we don’t actually have.

I hope this was helpful!  If you’d like to talk more about ways to maximize your money, you can always reach out to me at

Live abundantly!