Famous last words: "I'll have plenty of money left in December"

*Disclaimer: this isn’t professional financial advice — just regular, educational info to help you learn! Investing comes with risks (yes, even losing money), and past performance DOES NOT guarantee future results. Always do your own research!

Good morning, class. Today, we will be discussing the annual budget. Yes, I am aware many of you just audibly groaned.

Hear me out, just because you don’t want to do something doesn’t mean you shouldn’t do it. In reality, I have found that every time I have staunchly avoided something, it has become abundantly clear in the end that it was needed.

Now, this is a great place to start. You see, I agree with your audible groaning — partially that is. I am not an avid supporter of an annual budget because I think it is a lovely, fun use of time. Rather, I support doing one because it is both undeniable and — as we will see — an act of kindness to your future self.

So, you may be asking yourself, why is this girl so pro-annual budgets when she has just admitted that they suck? Well, unfortunately, I am a true supporter because of how rude an awakening I had when I finally did one.

Let me explain. When I began my journey down the rabbit hole that was figuring out my finances, I was told right off the bat to create an annual budget. I agreed it was a good idea, then promptly did nothing.

This was not because I disagreed with needing one, but rather that 1) I didn’t think it would yield anything different than the monthly budget I was already doing, and 2) looking back now, I think I was scared to run the numbers.

And yes, you should be smirking, saying, “Well, if the numbers would be the same, why would you be scared. But you know, you weren’t me, and we can all live in blissful denial for a moment or two. (That being a good idea is a totally different issue, however, so I’ll digress for now).

So, in my — unfortunately nonfictional — timeline, I am sitting pretty with my monthly budget — yet another topic! — and happily ignoring the annual one. Until one day — thanks to my bible aka Your Money or Your Life — I realized all I was doing by avoiding an annual budget was hurting my future self. Now, I don’t know about y’all, but I want my future self to be so freaking happy she almost can’t handle it. So, when it comes to acting on her behalf, I am all for it (or at least I try to be lol).

Thus, I finally sit myself down, muster up some bravery, and plug in the numbers. And you know, I wish I could say the bravery was unnecessary. Unfortunately, I cannot. As it was at that moment that I found out why an annual budget was so important. You see, before me was a negative number. And while you may be reacting, well, hey, you can’t always be spot on, I’ll just let you know right now that the negative number was in the thousands.

Feel free to laugh out loud. While I wanted to cry in the moment, I now find this outrageously funny.

So, looking at this number, I realized very quickly that my lack of attention to my monthly spending would have actual consequences. Now, my annual budget is manual, and thank god for that, because I was able to simply readjust the numbers bit by bit so that I wasn’t over by an outrageous amount in the end.

You may be thinking that this was some hours-long Herculean feat. But, in reality, it was a short but shockingly effective lesson in how much things add up to when multiplied by twelve. For example, the two glaringly obvious charges I saw I was overspending on were gyms (climbing and regular) and clothing. So, it was a matter of better knowing the limits of my spending in those categories, rather than life-altering decisions about money (at least that’s how I came to see it after a few hours).

While I understand that budgeting really isn’t for everyone, I truly believe the annual budget is one of the real kindnesses we can show ourselves when it comes to finances. Because yes, it does kinda stink to realize you can’t just buy what you want when you want. However, I think that a disappointing realization drastically outweighs finding out you have an overdrawn account or have gone into credit card debt.

I also think that one of the most helpful parts of the annual budget is an appreciation for how small things can add up to numbers we are not willing to spend. This is all the more important in this age of buy now, pay later. Such payment structures allow for a sum to be pulled from your account that you maybe only hypothetically agreed to. An annual budget, on the other hand, can help you realize that you don’t actually want to spend such an amount.

Okay, one last thing before you start! If there is one thing I have found irritatingly consistent over this year, it is the monthly unexpected expense. I don’t know what in the universe decides this, but there is an unexpected expense every single month (and logically every single year as well). So, to prepare for this, I simply take the number I think I’ll have left for the year and subtract a bit from it. This way, I can be happily surprised to add a few bucks back to the total, as opposed to disappointed that the amount is smaller than expected.

Now, with all this in mind, you are ready to brave the annual budget! Please know, even if you just open it, that is a start!

So, without further ado — yes, I know there was a whole post before this statement! — here is the Annual Budget that I use! Simply open the template, make a copy, and get to budgeting!

Annual Budget Template Link

Note: this template is made in Excel, so, of course, use something else if that works better for you!