Create a Personal Finance Yearly Budget

Generally, our budgeting courses focus on monthly calculations. We guide you to tracking your spending each month and making sure your income meets all of your financial obligations. With monthly rent or mortgage payments, utility bills, and credit card statements, it just makes good sense to create a monthly budget.

But there are times when a yearly budget makes good sense, too. Some big expenses only come around once per year, like holiday spending, taxes, annual medical checkups, and perhaps insurance. Doing your budget monthly doesn’t always leave you prepared for these big annual bills.

Personal finance yearly budget
One thing we advise when creating budgets is to take annual expenses and divide by 12, then make them part of your monthly budget. So if you spend $600 over the holidays on gifts and family gatherings, you should be setting aside $50 every month in a holiday savings fund.

Another thing that should be thought of on an annual rather than a monthly basis is unexpected income. If extra money comes in, like an extra large tax refund, it would be irresponsible to treat it as part of your monthly income. It will look like you’re way ahead for the month and it will be tempting to waste that extra money on something frivolous. Part of the point of a budget is to have a plan for every dollar, including unexpected windfalls.

If you get a sudden influx of income, set that aside to fill up your emergency savings fund or go toward your long-term goals. If you didn’t expect the money, then you won’t be losing anything by not spending it. If your car breaks down a month later and needs expensive repairs, you’ll be glad you didn’t take that extra money and spend it on a spontaneous vacation.

Check out our budgeting courses and downloads for more help with the nuts and bolts of the budgeting process. Remember to think about yearly expenses and include them in your calculations in the short term. After a few months of tracking and budgeting for the month, planning for the full year should be much easier.
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