Happy New Years Eve! Yea, 2020 is over and in the books tomorrow. 2020 is a year that we will all want to forget. I am optimistic that 2021 is going to be better by a mile. I don’t see how it could have been any worse.
In 2020 we lost my Mom to COVID-19 and other health issues. We lost our Sister Audrey who was only 41 years old. We had to wear Masks and many businesses were closed up at times or had restrictions. Then on top of that our boys missed out on Home Coming, Prom, a formal Graduation and had to do school on-line at times. What a crazy year. So, 2021 has to be better right?
Now is the time to review your 2021 Budgets and Goals for you and your family. We do actuals each month of our expenses and then do a rolling recap for the year. Darlene and myself review our past years expenses when we are doing our next year’s Budgets and Goals.
Things that we didn’t Budget for in 2020 that came up was some Medical Issues we had that we didn’t plan on. They were over $6,200. We put in a Shed for our folks which was over $8,300 that we didn’t Budget for. Then we had some major Car repairs that were over $4,500 that we didn’t plan on. Then we had Funeral Expenses that we split with my Sister for our Mom and we Published a New Book this year. We had $22,000 of expenses that came up in 2020 that we didn’t plan for this year. That can happen each year and that is why we keep any Emergency Fund to help our in these crazy years. Most years we can come in below our Budget or just barely over but not in 2020.
Our family keeps our Budget, Gift giving breakout and Yearly Goals posted in our Bedroom so we can see it easily everyday to help keep us on track towards our goals. Besides doing our end of the month recaps and then having a meeting to cover them.
Our 2020 Goals was messed up big time with COVID-19 and all the crazy things that came up. We hit some goals but others we didn’t. Due to COVID our goals we had for our Disney Cruise was not hit because they canceled the trip. We had goals for taking the boys to special events and that didn’t happen. Then we had goals for taking the boys to movies that didn’t happen. It wasn’t all doom and gloom for our 2020 goals, we did hit a few of them. I don’t think we ever had a year that we hit every goal anyway. Things come up.
Remember my disclaimer on millsway.com. I am not giving any legal, medical or financial advice. This podcast and blog are just for entertainment.
This new year our family goals is about the same as 2020 except for less trips planned and lower expenses. We revised our Budget for 2021 with less expenses since Logan Graduated and having less Vacations planned. We have a Budget for our family Expenses of $50,000. Let’s hope we can come in under that.
Having a personal budget is like work. The place you work needs to spend less on expenses than they bring in for income. That is no different than your own personal budget. It is simple Math.
Sometimes when I have worked with people, they had to make hard choices what they felt was hard to them. To other people their choices may seem like they should have been easy. For instance, if one family gives their kid’s $100 per week allowance and someone like us that doesn’t pay our kids an allowance, we would see that as an easy choice to cut back on in the budget. But they may not think so.
One family may spend $150 per week on Cable TV and another family like us has Antenna TV. So, for us that would be an easy expense to cut back on in our eyes but maybe not theirs.
Couples I have worked with in the past had a harder time agreeing on what to adjust than single person of course. Sometimes people made even larger reductions by downsizing their house or selling off an expensive truck they own.
Of course, before they can save for retirement, they need to get their budget in-line and then get all their debt paid off.
Our Budget has Needs and Wants in it. Remember we need Shelter, Food, Water and the rest of our expenses are negotiable. Yes, we need clothes but in reason. Our Clothes budget for the four of us is $1,380 a year. I have seen some people spend over $6,000 on just clothes a year. Some people think if Blue Jeans or Shoes aren’t over $100 than they aren’t any good. If people make the income to support $6,000 in clothes then good for them. But a majority of people have debt, no savings and spend more than they make so they need to look at every expense.
Below are some suggested rough percentages that people could use as a rough guideline when doing a budget.
Here are some suggested percentage of your family take home pay after taxes and insurance.
Total Housing Expense – 20% to 35%. Doesn’t matter if you rent or own.
Total Utilities – 5% to 10%. That includes your Cell Phone and Cable TV.
Total Food – 5% to 15%. Some people look at $150 per person a month. This includes eating in and eating out.
Out of Pocket Medical and Dental Expenses – 5% to 10%. Ours runs us currently about 2%.
Total Car Expense – 10% to 15%. This is all car expenses, gas, oil, repairs, tabs and more.
Total Entertainment – 5% to 10%. We spend extra on this expense with our vacations and my golfing addiction. LOL
Clothing Expense – 2% to 7%.
Charity Expense – 0% to 15%. A lot of opinions on this. If it is important to you than budget for it and take away from another expense. We are just talking simple Math.
Total of all Insurance Expenses – 10% to 25%. There are ways to save on Insurance like shopping around or looking on if you are over insured. Our Insurance costs is really low for us.
Debt Payments – 0% to 10% is a rough number depending on how much debt you have or if you are debt free. Also depends on how fast you want to get debt free depending on your Financial Freedom goals.
Savings – 0% to 25%. This depends on the person, situation, goals and if they are debt free.
It isn’t Rocket Science but it can seem like it to some people when we are talking Budgets. Some people don’t think it is possible. I am telling you from my own personal experience of working with clients to tracking my own expenses since 1982 that it is possible.
You may say that you aren’t a numbers person but this is simple Math and very important. We may not want to talk about the subject of Money but it is actually what we live on. Money is any currency that we use to pay the expenses from a $100 bill to Digital Currency.
If you are married and having problems working out a budget together it may be good to get a third party involved. Maybe your Accountant, Insurance Agent, Parent, Friend or a Financial Coach like myself.
What is your situation? Do you have a Budget? Do you track your expenses each month or not? A budget is worthless exercise somewhat if you don’t track your expenses and do a recap to see if you won for the month or not. Same with a yearly recap. Some people use Envelope Budgets, Zero Budgets or even Reverse Budgets. What is most important is the one that works best for your situation.
We hope everyone has a safe, fun and happy New Years and a Great 2021 from our family – The Mills Family.
Here are some positive quotes I like;
“Get your Money to Work for You… As hard as You Work for it.” By Napoleon Hill
“1. Make Money. 2. Use the Money to Make More Money. 3. Repeat the Process.” By Warren Buffett
“There is no way to happiness; happiness is the Path.” By Buddha
“Change Your Thoughts – Change Your Life” by Wayne W. Dyer
Let me know your thoughts about this blog and let me know of others you would like me to do in the future. I feel we can all learn from each other. That is why I am in the helping people retire early, enjoy life more and be more successful. Also, please see my Disclaimer page.
Don’t give up on your dreams; don’t let others talk you out of your dreams. Make your dreams happen. Make it happen today.
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