Why I Update the Family Budget Every January

Happy New Year! I’m still having a hard time believing that the calendar has turned yet another page. After the hustle and bustle of Christmas, holiday get togethers and new year’s celebrations, I find I’m ready to get back into a regular routine and get organized.

Part of getting organized for me is to get my desk and paperwork in order. Ugggh. It’s one of my least favourite things to do, especially since I let the ‘file pile’ get pretty high before I get around to actually putting paperwork away. With technology, you’d think that we’d get away from all this paper. I don’t think that will ever happen.

So I tackled the pile the other day and then tackled updating our family budget. The beginning of the year is really the best time to update your budget.

You can review your expenses from the past year, set up any new pre-authorized contributions (PACs) and get yourself set up for the new year. Want to save for a vacation, major purchase or have the money for available for NEXT Christmas (yup, I said it!)? In fact, just saving $15 a week from Jan 1 to Dec 1 (approximately 48 weeks) will work out to $720. That’s a pretty healthy Christmas budget if you ask me.

Setting up a PAC is the easiest way to do it. That $20 or $50 a week can add up quickly. I’ve set up automatic savings for several things: our RRSP contributions through our financial planner, our emergency fund, our travel and major purchase account and monthly PACs for the kids and their RESPs.  By reviewing in January, you can readjust based on the previous year and also get a head start on the impending income tax deadline and top up any RRSP contributions. A new year, a new start right?

I keep track of everything in an excel file. I’ve set up a spreadsheet that shows all our income on a monthly basis with a total line. In the next section I have all of our automatic savings. The third section includes a subtotal of all of our utilities and other expenses. Finally, there’s a list of all our other expenses.

The total expenses are added up and subtracted from the total monthly income. The final number shows what’s left at the end of the month. If it’s negative, you need to take another look at where your money is going every month. If you have a bigger balance in other months, maybe there are some expenses you can shift around.

The hardest part is being honest about where you spend your money every month – including the small, seemingly unimportant things we spend on like specialty coffees or lunch every week. But taking the time to organize and understand the money coming in – and the money going out – and setting up the right checks and balances will take some of the stress out of it all. And who doesn’t want less stress in their life?




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