Saturday, January 3, 2015

2015 Financial Goals and Budget

One of my New Year's Goals is to continue to manage my finances in a manner that allows me to remain debt-free, while putting daughter through university.

How will I achieve my financial goals?  I set myself a budget or "spending plan". I base my budget on my take-home pay, after deductions.  Ideally, one's expenses should be less than one's income. Or, at least, equal it. If the expenses are greater, then, one can try to increase the income or decrease the expenses (or both).  For several years, I tried to limit my spending to 70% of my take-home income (not always successful) in order to save the remaining 30% (again, with varying degrees of success).  Now, however, because I am paying for daughter's tuition and rent, my monthly expenses amount to more than my monthly income and those savings are proving to be a blessing.

One can't set up a budget without knowing the current expenses.  When I set up my initial budget, several years ago, I kept a spending log for 1 month and kept track of all my expenses and I went through my check book and statements for the past year to get an idea of one-time yearly payments and monthly averages for things like utilities. 

When setting up my budget, I started with the fixed expenses.  These are the expenses that remain the same from month to month - such as mortgage, property taxes, car payments, auto insurance, etc.  One can always try to reduce them by refinancing, switching insurance companies or making changes to policies, etc., but usually, these are one time changes.

Then, I deducted all the fixed expenses from the income and that is what I had to spend on all the other, "discretionary", expenses, such as food, clothing, utilities, savings, etc. As I said earlier, ideally, this amount should be sufficient to meet all other expenses.  If it wasn't sufficient, then, I needed to make some adjustments to make sure that they do come out even.

I allocate a set amount each month for my utilities: water, gas, electricity, phone, etc. Even though my gas (heating, cooking) varies from nearly $300 in the coldest of winter months (Jan/Feb for us) to under $20 in the heat of summer, I average it out and keep what I don't spend during the summer in the account to help pay the higher bills in winter.  For items that are paid quarterly, yearly, etc., I take the cost and divide by 3 or 12 and put aside that money monthly, either in my checking account or in my savings account until needed.

When I look at my budget with an eye towards trimming costs, all my variable expenses are fair game. I analyze each and every expense to see what can be eliminated and what can be reduced to cover only the bare essentials.  One might say, "But I've already cut out all the extras". Maybe. Maybe not. Depends what one considers to be extras and what one considers to be essentials. But each expense ought to be examined and considered.

I think of it as a challenge!

For me, my budget is truly a spending plan for it gives me the boundaries within which I am free to spend! For me, that is a truly liberating concept. I don't have to worry if I spent too much or feel guilty about how much I spent - it was no more than what I had planned to spend.

My current budget consists of nearly 30 categories (some are sub-categories; for example, under the category of "Utilities", I have subcategories of water/electricity, gas, telephones, internet, etc.)  This works for me, because I like this level of detail.

My categories include House & Garden (sub-categories: Property Taxes, Home/Earthquake Insurance, Home Maintenance, Garden Care, Household Products),  Utilities (sub-categories: Water & Power, Gas, Telephones, Internet/Cable, Car (Gas, Insurance, Maintenance, Registration), Daughter (Tuition/Fees, Text Books,Rent & Utilities, Health Care), Self (Health Care, Personal), Groceries, Pet Care, Entertainment, Donations, Holiday/Gifts, Taxes & Dues,  and the all important "Miscellaneous"!

What are your financial goals for 2015?  How are you planning to meet those goals?


  1. [Cyd] Earthquakes all over the place two days ago. S-c-a-r-y. We got unexpected snow and thrown back into the deepfreeze via Alberta Clipper. Currently negative 24.

    You might find the term Net Income helpful to describe actual, take home pay after all deductions. Hope you'll forgive me for again trying a small change your thinking with, a free, electronic income/expense monitoring system.
    Was your home eligible for the HARP program? Possibly a way to pull income from house for DD's uni costs. Different system but I know there are thousands of small scholarships, grants, bursaries, awards, that are never even applied for.
    Hiring tradesmen is terrifying for us all. We ask friends, neighbours, colleagues for referrals. 2nd, check with closest firehall, these guys earn extra via home repairs/refurbish. 3rd Angies list with a minimum of 3 written bids and meticulous check of references. HD & Lowe's have names available to check prices for specific tasks.

    1. Hi Cyd, helpful comments, as always. Thank you! We had an earthquake yesterday! My house shook, but too far away and too small to do any damage. Don't envy you on those temperatures! Keep warm! Yes, net income; but "take home pay" is a commonly used expression here; less technical, I guess. My house was not eligible for the HARP program, but, in any case, it is paid for. DD is eligible for financial aid in the form of student loans, but I'd rather she isn't burdened with debt after she graduates. We make choices that enable us to manage. For example, we chose for her to live at home and commute during undergrad so we could save on housing costs.


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