In July I wrote about the categories that are in my personal budget in the post Jumping off the Financial Cliff Without a Net. I'll use the same ones to see how things went this past year and what changes I should make.
- Mortgage payments: I own my home so no payments No change
- Real Estate Taxes: should be somewhat lower next year due to decreased valuation of the home in 2010 (always lags by 2 years) Reduce by 5%
- Home Owners Insurance: very stable over the last few years. No change.
- Utilities: electric, gas, water, sewer/trash pickup will go up. Increase 10%
- Home maintenance and repairs: under budget this year, but house is one year older. Will hold with no change
- Food and household supplies: under budget this year due to smarter shopping and coupon use, Expect food prices to continue to rise. Increase 10%
- Internet and cable TV: doubt cable company will raise rates again. Too much pressure from other choices. No change
- Cell phones: expect wife to get a smart phone. Will increase costs by $35 a month. Increase 25%
- Decorations & furnishings: under budget this year. Don't need much in way of new furnishing or planting. No change.
- Yard service: No change
- Clothing purchases: slightly under budget for year. Don't need much beyond basics. No change
- Dry Cleaning/Laundry: budget for entire year is $90 and only spent a little more than half that. Reduce by 30%
- Entertainment: under budget for this year but purchased theater tickets for 2012. No change
- Dining Out: will be right on budget. No change
- Auto gas, repairs, insurance, registration: bad year for cars - 36% over budget. Gas will go up. Increase 20%
- Health insurance premiums, uncovered expenses, co-pays: 15% over budget this year even though I planned for an 18% increase in premiums. Increase 30%
- Health supplies over-the-counter vitamins & medicines: slightly under budget. No change
- Eyeglasses: neither of us are scheduled for new glasses next year. No change
- Haircuts & beauty salon: a bit under budget because I went five weeks between haircuts instead of four. No change
- Gifts: under budget since decided to not exchange presents between adults at Christmas. Still over budget slightly due to unexpected wedding and baby showers. Reduce by 25%
- Computer purchase, repair, software: way over budget due to replacing crashed computer, new printer, and a few external hard drives. I will need a new computer next year. Increase 20%
- Subscriptions, postage stamps: under budget due to canceled subscriptions. Reduce by 15%
- Charity: on budget. No change
- Vacations: big trip to Hawaii and several day trips. Next year no biggie. Reduce by 50%.
- Life insurance: will continue to buy policy on my life until I'm 65. No change.
Not surprisingly, next year I will be faced with increases in the categories you might expect: utilities, food, gasoline and car maintenance, health insurance, computers, and cell phones. Meaningful decreases can be taken in vacations and gifts.
The bottom line looks like a total monthly budget that should be about 5% more than this year. Both my wife and I will get our new health insurance premium information in a few weeks and that could cause a major pruning of other categories if my guess at the size of the increases is off by a lot.
How about your situation? An accurate budget is the only way to help you achieve a satisfying retirement. There is no other way to stay on top of your expenses and be sure your financial plan is working well. It is time to take a look at how you have done in 2011 and begin to think about next year. I welcome your comments and suggestions.