Yesterday I had some down time at work and tinkered with my 2017 annual budget. I'd actually started it a couple weeks ago by making a duplicate my 2016 Google sheet and changing all the years in it. This time I went through and updated exact dates for when paydays, grocery shops, etc. were going to come out of the budget.
As a refresher, I switched from monthly budget to annual budget starting in 2015. I used to have a single-sheet monthly budget and if there were infrequent expenses like Xmas and the CSA, I would set aside a little each month.
Now I set up big annual expenses to come out of the month they're in and estimate utilities amounts based on real fluctuations from the previous year. We pretty much have a big enough surplus every month to do this, but I did have to divide up bday and Xmas line items over a couple months to make sure we didn't have a deficit any month. That's because those holidays come during the winter, when our estimated utilities are at their highest and our grocery budget is higher not having the CSA box to supplement.
My annual budget consists of 13 sheets: one for each month and a final sheet that adds up income and expenses and divides expenses into Needs, Wants and Savings.
I'm sure there will still be changes to the 2017 budget before it's in effect, but right now it looks like our "Needs" will increase about $3000 next year. This is due to a number of factors:
- Our mortgage payment increase is adding $2200 to the year's expenses. (That might be less if I can figure out when the temporary part of the increase ends in 2017 and by how much.)
- Bus passes for AS and AA is now a regular line item, adding $1000. (We used to just pay for them by moving stuff around, but now that AS is going out more during the day and AA is 6, decided to budget something for it.)
- Increases to my and AS's healthcare premiums total $600.
- Utilities are estimated to be $400 more than what we estimated in 2016.
- Daycare costs are going up $300 (for the whole year, not per month).
That's actually about $4500 more, but it was offset by the exchange rate on the UK mortgage and management expenses being lower.
Do any of you follow the 50/30/20 rule (50% needs, 30% wants, 20% savings)? That's my rough benchmark of ideal, but we're not anywhere close to it. (Keep in mind we don't budget AS's freelance income at all; I add that in quarterly but don't track where it's spent, so the annual income ends up accurate but not how much of her paycheck goes to wants/needs/savings beyond the planned stuff. I do add in how much we pay in taxes for her though.)
So, with just my and NT's income and the rental income from both places, my spreadsheet does calculate percent of budget by needs/wants/savings. Of course, me being me, I get in the weeds about how exactly to calculate that, so I have several different results for "needs":
Needs total including NT and CJ tax withholdings: $108,270.92
Percent of gross income 69.23%
Percent of set budget 71.02%
Needs excluding taxes: $86,668.76
Percent excluding tax 66.24%
Percent of post-tax income excluding tax 64.30%
Even though it seems out of whack, when you add in AS's income, our set needs are a much more reasonable portion of our income. For instance, on the 2016 budget, with 2 quarters of her income being added, percent of post-tax income excluding tax is 58.76%. That percentage will decrease as we add Q3 and Q4 income to it.
So, what are my biggest annual expenses? Well (and again these amounts aren't final, especially the mortgage which may decrease about $1000), right now for 2017 it's looking like:
Duplex mortgage (including tax/insurance escrow): $37,223.28
Daycare (some of which is pretax): $13,545.00
Groceries/household: $9,950.00
CJ medical premium (covers me, NT, AA, SL): $5,136.00
The highest "want" that's a regular budget item (we'll probably use AS's income for other big wants like travel and home improvement): $6,843.00
That includes $40 per week for each adult and an allowance for each kid ($4 and $6 per week, will go up $1 every birthday). This year I restarted their allowances and have been scraping it together from other funds, so for 2017 I'm making it easier and adding it to the weekly spending money line item.
I like the annual budgeting a lot. It gives me extra stuff to fiddle with. 
And when bills or income increase, I can soon see the impact on an entire calendar year. It's not a perfect spreadsheet; as I said, I don't track what we spend AS's income on besides tax and retirement. But it is a valuable tool. And I can easily paste it gradually by the month into my main budgeting tool, my ledger or future checkbook spreadsheet which I call "Number Crunch."
Annual budget
August 4th, 2016 at 04:28 pm
August 4th, 2016 at 08:50 pm 1470343809
With devaluation of British currency and Briexit are you tempted to increase pay down of British flat? Were repairs sufficient to increase rent? Do you anticipate it reaching 'break-even'?
August 4th, 2016 at 09:03 pm 1470344612
It's not that I don't consider her income to be family income. Right now on our spreadsheet, only 6.5%-7.5% of my and NT's income goes to "wants." If that were really the case I'd want to evaluate other factors and see if we could get the categories more in balance. But I know a good deal of AS's income will go toward wants, so I'm OK with that ratio.
I don't feel any urgency to pay down the flat mortgage; the interest rate has been just over 1% for years, so we pay very little interest. Yes, the rent went up 75 pounds from where it had been. Without the renovation it would have been difficult to get what we'd previously been getting in rent (or to get it rented at all), so the benefit was more than just 75 per month. We spent about 12,000 pounds on the renovation, and we net about 4700 per year in rent after mortgage and management, so I suppose it will take about 2.5 years to make back the money we spent. Meanwhile the home value increased as a result of the renovation and also because NT's old neighborhood is in high demand these days. So I think it's a pretty good deal to keep it going and just keep paying off the mortgage at the regular pace, and save up that extra money as an EF fund (with occasional spending during UK visits).
August 4th, 2016 at 09:05 pm 1470344731
I just have one excel worksheet that I can budget for the entire year - or at least estimate the budget. I am pretty close 90% of the time on the estimates but as I've used the same workbook for 10+ years I know my spending pretty well.
I love using it as a forecast tool: if this-then-that kind of planning.
August 4th, 2016 at 09:17 pm 1470345426
August 4th, 2016 at 10:16 pm 1470349006
August 6th, 2016 at 03:56 pm 1470498977
I have annual categories within my budget I set money aside each month, but other than that, the idea of budgeting annually seems overwhelming to me. I'm glad it works for you though!
August 6th, 2016 at 11:39 pm 1470526796