Why you should think about your 2015 budget plan now: November 2014 Budget Update

DON’T JUST PARK YOUR VEHICLE…

 

The end of 2014 is staring us in the face and now is the time to start thinking about putting together your 2015 budget plan.

The worst thing you can do is leave budgeting until the last-minute if your plan is to track your expenses over the entire year.

Sure the ideal time to put a budget plan into action is the beginning of the year but starting a budget any time is better than no budget at all.

Why is planning important?

The first thing you need to ask yourself is why you are planning? Do you have a mission in mind? If yes then you need a plan. If using a budget is your mission then you need a plan. Planning is part of a strategic planning cycle that starts with a mission then goals, desired outcome, strategies, measures/target and finally results.

That’s how we measure success and in our home the budget is critical to managing our financial success even more so now that we have a son.

As we were going over the November budget we talked about how not having a mortgage has affected our budget. It really does leave it quite naked but from a good stand-point and no I’m not complaining.

With rising food prices expected in the new year and the cost of gas going up as high as it did in 2014 we may be forced to make changes to the numbers in our 2015 budget plan.

Staying on budget for food this year has been tough and although it looks like we may reach our goal of spending $2820 for the two of us it was certainly worth the challenge. Keeping in line with inflation is one thing but pricing on some things have sky-rocketed.

Making budget cuts is nothing new for us because if it has to be done we do it. With our mortgage gone we have invested a good chunk of that money which means that we still run a tight ship around here. Having an emergency savings is one step in our budget plan to help us feel secure in case something should happen. Do you have an emergency savings?

With Christmas in a couple of weeks thinking about your 2015 budget plan now might help curb overspending especially if it’s all going on credit card (hopefully not). It’s no fun waking up on Jan 1 and thinking, “Oh man I have to pay all that back now”.

I get lots of mail here at Canadian Budget Binder and one CBB Fan asked me, “Does a budget change based on what country you live in?”  Not really. What he also wanted to know was whether he could still use our free budget download if they don’t live in Canada? Well of course he can.

There’s no rule that says if you live in the UK that you must use a British budget or by residing in the USA you use an American budget as it’s not based on your homeland. Sure go ahead and download it!

A budget is made up of categories and numbers so as long as you know what you want in your budget it doesn’t make a lick of difference where you live.

 

Start your 2015 budget plan

 

Especially now that we are coming to the end of the year I see more people landing on the blog searching for information about their 2015 budget plan.

They may have never used a budget before but come Christmas with all the food and gifts that may end up on credit seems to cause some people to panic about paying back the debt in January.

A budget is not going to be the immediate answer to everyone’s debt prayer as it’s simply a vehicle to get you where you need to go financially over time. If you create a budget plan you have to make sure you drive the vehicle and if you park it make sure you test the engine at least once a month.

Don’t think that you can create your 2015 budget plan and park the vehicle for the year because you will find that your budget will not only change but you won’t be saving and spending what you thought you were.

You have to track your expenses monthly and accept your budget plan as part of the family which means it deserves attention. Once you download my free budget feel free to read my 10 step budgeting series to help motivate you get started with your new budget plan.

Are you thinking about a 2015 budget plan?

Happy Budgeting!

 

Where the money went

 

If you scroll down you can see the actual numbers for each budget category. Below I will chat about the budget categories that might have to be explained.

• Car maintenance- Since the snow is here that meant that we get our Krown undercoating done which cost us about $135 with an annual $10 good customer discount.
  
• Gas (vehicle)- It was nice to see our gas budget go down a bit this month since we’ve seen prices drop. It’s not the same price when I moved to Canada at $0.97 cents a litre but I’ll take it.
  
• Entertainment- The wife, our son and I made a few trips to the mall and ended up having lunch which was a nice change for us. We also splurged on Starbucks Chai Latte which is my wife’s favourite tea.
  
• Grocery- We ended food shopping in November over budget by $12. As you know our November and December grocery budget is $102.11 since we had a huge overspend in October. Find out if we can stick to our grocery budget for 2 for 2014 $2820 with a monthly $20 stockpile allowance.
  
• Baby- We loaded up on diapers this month since we got an amazing deal at Target. We bought 4 jumbo boxes of diapers with a regular cost of $41.99 for $18.99 each after coupons.
  
• Investments- This category has been updated as I am investing more in my RRSP.
  

 

Unexpected expenses

 

Surprisingly there were no unexpected expenses for the month of November which we welcomed since we had more than our fair share of surprises the past few months. We almost didn’t have a clean run in November though.

Just the other day we thought for sure we would be buying a new refrigerator since it stopped working in the middle of the night. Of course the wife wakes me and by 2 am I have our refrigerator torn apart and in pieces all over the kitchen floor.

It turned out the fan in the back of the refrigerator had ice build-up to the point where it caused the fan to seize. It took me about two hours from start to finish to get the refrigerator back up and running.

Normally one would put it on defrost by turning the refrigerator off called a “manual defrost” but that wouldn’t have fixed the problem since I noticed the fan was coming off the motor. It was worth pulling the refrigerator apart. Now it’s quiet and works like a charm.

When it comes time to renovate the kitchen I’m pretty sure our new refrigerator will set us back about $3000 so I’m hoping this gives us time to keep saving so we pay cash for all of our renovations.

 

Budget changes November

 

The only budget changes were with our investment category. We met with our financial advisor earlier this month and I’m now contributing more to my RRSP since we have extra money. I still have plenty of RRSP room and am hoping to double my contribution at some point starting in 2015-16 to start maxing out.

Once I catch up with my RRSP I’ll be piling money away into the TFSA as I’m not putting that much away now but something is better than nothing. I’m hoping once I get hired full-time at my part-time job that will ramp up my defined benefits so then we can revisit my RRSP contributions. Right now I’m in the program but not too much is invested since I only work part-time.

 

Free budget

 

I’m currently offering 2 versions of our budget and the reason behind it is simple. Firstly, read the disclaimer because what you do with it is your own business so if you mess it up you need to sort that out. I have not closed off any cells so you can make all the changes you like to the budget to reflect your lifestyle which is what the fans wanted.

Although I would love to help every single fan with their budget I am unable to do so but I am always willing to answer any emails you send me so don’t be shy.

This was after all meant to be our personal budget and although I would love to customize it for every fan that wants to use it but, I’m afraid I cannot. I’m not selling this budget or hope to make any money from it so enjoy this free budget and I hope that it works for you as much as it does for us.

 

Canadian Budget Binder Budget Spreadsheet

 

(Click to see a larger version of the budget spreadsheet or download it for FREE)

You can download the free budget spreadsheets here.

• Budget 1– You can use the pre-existing categories or you can use your own if you wish and you have the option to use projected expenses or not. Please read all notes left around the budget for tips.
• Budget 2-Everything is pre-set so you have to use the pre-defined categories but this budget will generate year-end budget figures where the other one won’t but you must use the categories already in this budget. If you change anything you will mess up the formulas and year-end figures. Please read all notes left around the budget for tips.

I’m always open to feedback but be polite as you don’t want to hurt my feelings Get started and don’t procrastinate. Test it out for a month and see how it goes. There is never any harm in trying something new in life.

You either love it or hate it, which is a fact with anything.

 

Our budget plan

 

How we budget our monthly expenses?

I often have fans ask me how to budget money and what we do in order to save so much money but the reply is that it’s not about the money it’s about the process involved. There is no one money manager in our household as we are both responsible for tracking expenses.

It doesn’t matter if you are using a cash only budget or you use your debit and credit cards throughout the month if your budget doesn’t balance then you likely have budget issues you need to review. You need to learn how to be your own money manager because no one else will care about your money more than you ever will.

We don’t always save as much money as we would like every month but most importantly we are not going into debt because we are budgeting our money. In fact we are currently debt-free including the mortgage which means all we pay for is monthly bills and expenses we create or that are fixed expenses such as the hydro and water bill etc.

One of the most important things we did for our personal finances was that we never let the budget deter us from reaching our goals.

Sure we’ve had crap months but we made up for it or we learned from our mistakes just like anyone else would. Budget failure only occurs when you give up on the budget which should not happen as long as you give 100% into making sure you reach your goals. We didn’t always earn the income we do today but what made do with what we were earning year after year so we didn’t go into debt.

Sometimes fans email and ask me if living on a budget in Canada is any different from living in other countries. To be honest I’m going to say, probably not.

If I still lived in the UK I could use this exact budget spreadsheet to meet all of my needs however the budget needs to be reviewed monthly. Below are links to the budgeting series which I wrote while designing our excel budget spreadsheet.

I’m not a financial planner/advisor so I can’t tell you how you should budget but I can show you how we budget our numbers. I’m just a regular guy just like everyone else; some might call me a budget or numbers nerd.

 

Our budgeting series

 

Please take the time to read through the budgeting series and I hope you take something away from the information. If you have any questions about what we do with our money tracker ie: The Budget than feel free to email me. I may expand more on the topics as we go along and add some mini-series on how we budget to break it down even further for you.

1. How We Designed Our Budget Step 1– Gathering All the information
2. How We Designed Our Budget Step 2– Categories
3. How We Designed Our Budget Step 3– Tracking Receipts
4. How We Designed Our Budget Step 4- Note-taking
5. How We Designed Our Budget Step 5– 5S Organization
6. How We Designed Our Budget Step 6– Who Does What and When?
7. How We Designed Our Budget Step 7– Balancing Our Budget
8. How We Designed Our Budget Step 8– Knowing our Coupon Savings
9. How We Designed Our Budget Step 9– Reading Our Bills
10. How We Designed Our Budget Step 10– Projected Expenses

 

Budget percentages November

 

Our savings of 53.36% includes savings and investments and emergency savings for this month.

The total spend this month comes to a nicely rounded 100% which shows that we spent our income this month, invested extra and used the rest as emergency savings.

Our Life Ratio which for this month was 15.71% and quite low for a change. Our projected expenses this month is at 24.12% which now includes some increases due to overspend explained in the 2013 year in review.

 

Budget percentages month by month

 

 

Expenses breakdown

 

This is simply a breakdown of our expenses which has helped us to understand where all of our money goes. As of May 2014 we are mortgage free so much of our money will be directed at savings, investments and renovations.

I appreciate that you enjoy this budget update each month but I do hope you view this as an educational tool rather than comparing your own financial numbers as our situations are all unique.

Almost 7 years ago I started working in Canada making a bit over minimum wage and have since moved up the ladder. I’m now working very hard to secure my dream job with a foot in the door. We aren’t all lucky but if you do the best you can at least you can look back and say you gave it a shot.

Sometimes we wish we had more money to budget with but understand that we only have what we earn and if we want more, we need to earn more.  Spending less than we earn and budgeting our money has been the easiest way for us to pay down debt and save money.

1. Chequing– This is the bank account where all of our debt gets paid from.
2. Emergency Savings Account– This is a high-interest savings account.
3. Regular Savings Account– This is a savings account that holds our projected expenses.
4. Monthly Budget Total: $4675.18
5. Monthly Net Income Total: $7233.11
6. Total Coupons Used to date: $68.19 (Check out our Ultimate Grocery Guide to see where our grocery money goes)
7. Projected Expenses: These are expenses we know we will pay for throughout the year = $1744.85
8. Total Expenses Actually Paid Out: $2687.16
9. Total Expenses Actually Paid Out: Calculated is $7233.11 (total net monthly income) – $1744.85 (projected expenses) – $2801.10 (emergency savings) = $2687.16
10. Actual Cash Savings coming out of Emergency Savings: Calculated is $7233.11 (total monthly net income) – $2687.16 (actual expenses paid out for the month) – $1744.85 (projected expenses) = $2801.10

 

Saving money

 

What are Projected Expenses? – We project expenses throughout the year so we have the money saved. PE= A projected expense is money automatically saved each month so it is ready when the bill comes in or when you need it as in the example below.

We review our projected expenses at the beginning of the year to set up our yearly budget and adjust as we go along if a new projected expense arises and needs to be added to the budget. Sometimes we remove a projected expense as well so it’s very important to keep an eye on your expenses.

This has happened on many occasions but it’s bound to happen as we can’t predict everything we have to pay for over the course of the year. The important part for us is that we are saving for these expenses and we no longer have to stress about taking money from our savings to pay for them. To learn more about projected expenses read Step 10 in my budgeting series.

When we spend the money in a projected expense category we move that money to our chequing account in order to pay for that incoming expense. So this means the numbers go up and down in the projected expenses account based on what we need to pay for that we saved for in the account over time.

The only thing you need to do is track your projected expenses each month manually as I can’t customize that for you in the excel budget spreadsheet as I don’t know what you will use for projected expenses.

For now we will have to manually track which means month after month we add up what we save in each projected expense category and minus what we spend so we know how much we have and what is left in each category. I’ll be updating our personal excel budget spreadsheet for 2015.

We pay money into the projected expenses account continually throughout the year even when bills come due as its revolving so as one bill gets paid the money continues to come in from the other categories all year-long. This ensures that money is always available. It may not always be enough but having something ready is better than having nothing at all and having to use credit.

So the $1744.85 gets paid into the projected expense account every month no matter what. It seems to be easier to track our money this way but you can do what works best for you.

 

Projected expense example

 

If our clothing category was a projected expense we have a budget of $50 per month for the two of us. If we spend $30 on clothes for the month that means we need to pull $30 from the projected expenses account to pay for this expense or we move only $20 to projected expenses for the month and leave the $30 in your chequing account.

It’s up to you how you do it as I mentioned above. I’m hoping to put together a projected expenses spreadsheet to track the expenses all year-long otherwise you need to do that to make sure you don’t overspend what you haven’t saved or will save over the course of the year.

It’s a fairly easy process and becomes a lifestyle change for your finances but the most important part is that the money is available and saved, which means potentially less stress.

This means we should have $600.00 per year for clothing to spend. We have to track that expense as we spend it manually but hopefully for our 2014 budget I can incorporate that into our spreadsheet so it tallies the numbers up as we go along. That way we will be able to know exactly what we’ve spent as an ongoing total.

 

Budget for November 2014

 

Below you will see two tables, one is our monthly budget and the other is our actual budget for the month of November 2014. This budget represents 2 adults and baby on the way plus all of our investments.

If it is highlighted in blue that means it is a projected expense of ours. You will also see our budget does not include the emergency savings as this is factored in at the end.

 

Actual budget expenses for November 2014

 

 

November 2014 Goals

 

Below were our tasks in November. Beside each I’ve left a comment after reviewing each.

• Finish adding lighting to the front yard landscaping-This may have to be put on hold until Spring 2015.
  
• Hide the wires for the flat screen TV in the spare bedroom- FAIL Didn’t have time to do this.
  
• Complete projected expenses tracking sheet for budget (ongoing)- FAIL I’m so behind right now!
  
• Reach 3700 Twitter Followers- FAIL I think I was being optimistic with this number.
  
• Reach 6540 Facebook Followers- 6539 FAIL by one fan!!
  
• Reach  1880 Pinterest Followers- FAIL 1874 Just short!
  
• Reach 2675 Followers The Free Recipe Depot Facebook- FAIL 2657 Just short!
  
• Reach 143 Followers Bloglovin- This is NEW!>>> Follow me HERE! PASS 🙂 Thank-you
• Read a chapter in my personal finance book-
  
• Help a new blogger with a task or question- PASS I chatted to quite a few new bloggers this month.
  
• Finish a page on the blog I’ve been working on- I’m still working on this, almost completed.
• Connect with a new blogger- PASS
  
• Finish the bathroom renovation- FAIL I’m working on it slowly.
  
• Repair the fence in the back garden- Spring 2015
  
• Paint baseboard in the back room- Spring 2015
• Buy a new blind for the garage- FAIL No time to get to the shops for this. I might wait until Spring 2015.
  
• Finish the walls in the baby room- FAIL
  
• Hang Christmas Wreath- FAIL I’m not hanging it this year, too busy.
  
• Sort out the Christmas outdoor lights- PASS
• Shut off outdoor water sources and bring in garden hose- PASS
  
• Undercoating of vehicle- PASS
  
• Put the winter tires on the vehicle and get it ready for winter-PASS
• Send off Christmas Cards or at least get them ready to go-PASS
• Send off for Baby Passport-PASS
• Cleaned the garage out completely- PASS It’s super clean if I must say so myself.

 

December 2014 Goals

 

I’m not going to add too much for December as we are only home for two weeks then we are off for the holidays so there’s not much time to get anything done.

• Hide the wires for the flat screen TV in the spare bedroom-
  
• Complete projected expenses tracking sheet for budget (ongoing)-
  
• Reach  3700 Twitter Followers-
  
• Reach  6545 Facebook Followers-
  
• Reach  1890 Pinterest Followers-
  
• Reach  2675 Followers The Free Recipe Depot Facebook-
  
• Reach 152 Followers Bloglovin- This is NEW!>>> Follow me HERE!
• Read a chapter in my personal finance book-
  
• Help a new blogger with a task or question-
  
• Connect with a new blogger-
  
• Finish the bathroom shower-
  
• Pick out new tiles for bathroom and accessories (mirror, towel bar holder etc. )-
• Buy remainder of bathroom renovation materials-
• Buy a new blind for the garage- FAIL No time to get to the shops for this. I might wait until Spring 2015.
  
• Finish the walls in the baby room-
  
• Repair door opener in our vehicle-

Spring 2015 Job List

• Repair the fence in the back garden- Spring 2015
  
• Paint baseboard in the back room- Spring 2015
• Finish adding lighting to the front yard landscaping-Spring 2015

 

Budget updates month by month

 

In case you missed our budget updates from the start of the 2014 year… here they are.

• December 2013
• January 2014
• February 2014
• March 2014
• April 2014
• May 2014
• June 2014
• July 2014
• August 2014
• September 2014
• October 2014

That’s all for this month check back at the beginning of December 2014 to review the final budget update of the year December 2014 budget to see how we made out following our own budgeting rules.

Happy Budgeting CBB’ers!

 

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• Tic Toc…. That’s the sound of your debt clock (canadianbudgetbinder.com)
• What My Life Is Like With Terrible Credit (canadianbudgetbinder.com)
• How I Reduced Our Grocery Budget From $1100 To $600 In 6 Months (canadianbudgetbinder.com)

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