One way to plan your budget is to complete an annual budget. This is a great strategy because it allows you to plan and save for the expenses that come once or twice a year, which can often break a normal budget. It is fairly easy to switch to an annual budget if you already have a monthly budget in place. If you do not have a budget in place, then you will need to sit down and figure out how much you spend on each budget category during each month or over the course of the year and average it out.
You should include items in your annual budget that you may not normally think of when planning a monthly budget. This can include car insurance payments, car registration, taxes on your home, life insurance, and tuition payments. Next you will write down the amounts of each of these items. Then you will divide the amount by twelve and include this in your monthly budget. You can leave the money in your checking account, or transfer it to a savings account until you need it.
Another great feature of the annual budget systems is that it allows for you to roll your any extra money you have in a category into the next month. This means that if you did not spend as much groceries as you normally do, you can use the money the next month. This also helps if you have varying power or heating bills throughout the year.
Once you have implemented the annual budget it is important that you track your expenses. You can do this by keeping track of individual expenses during the month, and then tallying the year to date expenses at the end of the month. This will allow you to see areas that you can work on, as well as see the areas in which you have improved.
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