This year has been quite the year for me and my husband, lots of ups and downs, but overall, a great year! We got to experience 3 wonderful vacations to the Bahamas (where we stayed with my sister), Ontario and Tanzania (in December) and even a short camping long weekend trip to Invermere, B.C during the July long weekend with 2 other couples from our church.
We were also able to fulfill a savings rate of just over 28% on average for the year with the first half of the year saving 35% and the latter months dropping it down to 15% to save for our vacation coming up in December. This has allowed us to each save 5 figure dollar amount towards our TFSA. If you count the 5% pre-tax retirement contributions we also make through our work which the company matches, I think we are in good shape retirement wise and are building our nest egg and making up for lost time.
However, 2017 was also a struggle in keeping our spending in check. With more disposable income available there was a tendency for us to spend more than we allocated on our budgeted line items during the year. There was also major expenses that we did not do a good job addressing throughout the year that caused us not to be able to reach our savings goal for 2017. These include buying a new mattress and frame, laptop, prescription glasses (no vision coverage from work so I paid the full amount), and a few other smaller expenses here and there. We also started paying better attention on the foods we consume and buy more organic fruits and vegetables, fish, quality meats and other protein rich foods. This has substantially increased our grocery bill each month so this budget line item had to be increased.
In reviewing the budget for 2018, I implemented strategies that will hopefully allow for better financial tracking and spending and reaching our savings goal set for 2018.
- Every Dollar
We currently use an excel spreadsheet to manage our budget and allocate every dollar to an expense or financial goal. Although the budget is helpful in showing us what we budgeted for each line item, it fails to address how much was actually spend in each line item. So for variable expenses like groceries or eating out, we found ourselves going over budget many months.
In addition to our excel spreadsheet which will serve as a static budget, I have also downloaded the Every Dollar app from Dave Ramsey that tracks both budgeted amount, amount spent and remaining balance. The idea being that every time I complete a purchase, I will quickly update the amount spent on my app, allowing me to simultaneously budget and track my spending within minutes. I prefer this approach to reviewing receipts at the end of each week.
- Cash only…again
We are going back to cash only system for paying for variable expenses like gas, groceries, eating out etc. This decision is to avoid the natural temptation to spend more that comes with plastic. I find that even if I am using my debit card, it still makes it easier for me to spend beyond my budget (not as much as credit), or at the very least gives me an unrealistic expectation of how much I can actually spend when I going through the aisles at the store.
When we were paying back our student loans, we followed the jar system and used cash only and as archaic as that may seem, it really worked for us. We could never spend more than we had in our wallets. So hardly got into more debt to feed our impulse purchases and bad spending decisions.
The areas we will withdraw cash for each paycheque will be: groceries, eating out, gas, small group, personal spending for each. All other expenses will be paid electronically.
- Realistic budgeted amounts
I will be the first to admit that sometimes with my eagerness to reach our savings goal I understate how much we should budget on variable expenses. I found this to be more so in 2017 as I set an ambitious goal of investing $25,000 combined towards our TFSA. Ending the year with a little over $21,000, I found that setting this goal may have been a bit high and will focus 2018 on making more realistic budget amounts for spending as well as saving.
Before I could determine how much we really spend on variable expenses like groceries, gas and eating out, I tracked our spending from July to September and took the averages of these amounts. I used these numbers or amounts close to these as the basis for our budgeted amounts in 2018.
My hope is that with more realistic budgeted amounts we will more likely to stick to the Every Dollar app and cash basis system that will be put in place in 2018.
- Lower our Retirement Investing Goal
In 2017, we had set out a goal to save $25,000 towards our Tax Free Savings Account (retirement), and although we will not be able to reach that goal, we will come close at a little over $21,000.
However, next year this amount will significantly be reduced to $12,000 combined. This is to account for the following:
- We plan on purchasing a new used vehicle at the end of next year and paying cash for it
- My husband is planning on challenging the CFA designation and will need to enroll in preparatory classes to do so, we plan on playing cash for these classes as well
- Since we revised some of our variable expenses upwards like groceries, gas and entertainment, we will need to account for these monies each month
- We may carry a small balance on our line of credit after our trip back from Tanzania in December and this will need to be paid off within the first 3 months of 2018
- Local vacations/ Staycations
This year we got to experience a lot of wonderful vacations outside of the province and country. However, due to the major expenses we will incur in 2018, we will limit our vacations in 2018 to local vacations that are drivable and affordable or even staycations if need be. Most likely visit different places in Alberta or British Columbia or visit our sister in law in Seattle so we can save on room and board.
This will probably be a common practice moving forward. Take more expensive vacations every 2nd or third year and do more low key vacations the other times. I think we went overboard this year with vacations because before this year we had no vacations since 2013 when we started paying off our six figure student loan debt. Moving forward, we will strive to pace ourselves and find balance.