One thing I do during the transitional period every year is to take a look at our expenses from the last 12 months to see how things are trending (are we spending more money on groceries? are we going out to eat more often? did the insurance go up for our car? when are the premiums due for our life insurance? etc.) and plot out a budget. I have a spreadsheet where I track our expenses in different categories and reconcile to our online statements on a weekly or monthly basis. This helps to give us a pretty clear picture of where we are prioritizing our money and then Brett & I can decide if we want to redistribute the amount of money we have budgeted in each of our categories (Bills, Insurance, Maintenance, Grocery, Gifts, Activities, etc). We will also evaluate where we are at with our debt and create goals for where we want to be with the debt by the end of the year - neither one of us like to have debt and so we strive to pay off credit card debt every month leaving us with the 'good' debt of our mortgage and another small loan.
Another major area of consideration are our savings goals. I am currently contributing 10% of my income to an employer-sponsored retirement plan where my employer matches my contribution. This is not optional, it is an automatic function of being employed by a state funded institution - it's not something I have to think about or make a conscious decision to do, it just happens and I have learned to live on the check that I get. This is not the case for Brett and so he does not have a retirement account, one of my major goals for this year will be to get a retirement account set up for him, probably a Roth IRA.
We have small savings accounts for the girls, to which a monthly contribution is automatically transferred (again with the not thinking about it!). For now we have not set up 'College' savings accounts for the girls but I am looking into the Ohio 529 plan and may open an account soon.
Then we have accounts labeled Emergency, Home and Vacation.
- The Emergency fund is exactly what it sounds like: in case of emergency, use this money. Ideally I would like this to hold an amount equivalent to our monthly expenses for about 4-6 months. Unfortunately right now the balance in this account is nowhere near that goal - so, goal #2 for this year will be to build up the Emergency Fund!
- The Home fund was originally set up as a place for Brett & I to build our next egg so that we would have a down payment for a house. Check! Now this fund serves as a place for us to set aside funds for projects and (eventually) renovations or remodels to our house. Hello, we have 2 daughters who will some day be teenagers and our house has 1 bathroom. That does not sound like a peaceful future.
- The Vacation fund is kind of a mad-money account that we have used to take day-trips or pay for the expenses unique to going on vacation! Airfare! Activities! Car Rental! etc, etc, etc. We have neglected this account to the point where it is barely hanging on, but we are planning a vacation for this summer to fly out to California for my cousin's wedding, so goal #3 will be to hoard money into this account.
So, I know this isn't your usual list of New Year's Resolutions, but this is how my brain works...this is what I know. Is there anyting I missed, anything you want further explanation on? Let me know, I would be happy to expand but I don't want to sit here and drone on and on and bore you to tears.