My 2017 Annual Budget - Part 2 of 3

As mentioned in Part 1, my 2017 annual budget is being done on a quarterly basis.  I created a generic quarterly budget.  However, as mentioned in Part 1, the quarters correspond to the seasons and there will be *some* variance.  This should only impact my flexible or variable spending as everything fixed will remain the same.  The plan is that prior to each quarter I will tighten up the budget and factor in anything seasonally related or planned (e.g. a trip or holiday spending).  
Budgets are not static!  They must be reviewed and reassessed frequently!

Let's get into the details!
 
Income/Salary (After-tax, after any deductions)
The first part is income.  I know my monthly after-tax income so this was easy for me.  (There may be a some slight changes once 2017 starts due to any new tax implications or the small increase I'm planning for my 401K deductions but nothing major so I felt comfortable working with my currently known after-tax amounts.)

[Make sure you calculate your salary based on an after-tax, after-any-deductions amount.  If you don't, you must budget for those items as expenses otherwise you will end up short and possibly owing the tax man - not fun!]

I get paid twice a month.  The paychecks are not the same due to different deductions.  So I took the monthly amount and multiplied it by 3.

Okay - this is good.  Now I know how much will be coming in.  Next, how much is going out?

Fixed Expenses
This part is focused on my known fixed expenses.  I first looked at expenses I would pay monthly.  My categories included the following:
- Mortgage
- Mortgage overpayment
- Property taxes escrow
- Property taxes escrow overpayment
- Building maintenance fee
- Phone bill
- Electric/gas
- Internet
- Healthcare (my health care insurance is deducted from my paycheck so this is the amount above and beyond that and would cover co-pays, over the counter medicines, prescriptions, preventative expenses)
- Gym
- Housekeeper
- Gas
- Car Wash
- Supplies
- Laundry
- Dry Cleaning
- Entertainment Streaming fee
- Professional Networking (keep your hand in!)
- Miscellaneous (this provides a buffer)
- Various Savings (e.g. 2nd Home Account, Rewire Account, G2H-FU Account, Home Maintenance, Car Maintenance etc.)
- Investing  (Brokerage and additional retirement)

Next I looked at annual expenses that I needed to save for on a monthly basis.  I took the total annual expenses amount, divided by 12 and then multiplied by 3 to get to the quarterly amount.  These included the following categories:
- Home Insurance
- Town Parking Permit
- Holiday Thank You Tips
- Christmas Gifts
- Birthday Gifts
- Museum Memberships
- Tax Preparation
- Travel
- Shopping: Clothing/Shoes/Other
- Technology Replacement (e.g. Computer, iDevices, etc.)
- Annual Credit Card Fees
- New Car
- Slush Fund
- Charities
- Subscriptions (e.g. newspapers, periodicals)
***This is where you would also include any sort of professional memberships or certification fees or conference fees etc.  These sometimes sneak up but if it is related to your job, make sure you have the money to pay for anything that is required (e.g. an annual certification).

(Admittedly, the goal is to save what I can on a monthly basis for items like holiday tips, gifts, museum memberships, charities, subscriptions, travel, and other categories.  Right now I do use my bonus or any extra funds to top up.  But as mentioned in Part 1, I want to get away from that because I simply do not feel it is sustainable.)

Flexible or Variable Expenses (i.e. what is left) What is left is what I need to manage very, very carefully.  I have taken this amount and divided it by 13 for each week of the quarter.  This amount has been further divvied up among the following categories:
- Weekly cash withdrawal amount (just because)
- Grocery Food & Alcohol
- Takeaways
- Work Food
- Transit
- Minimum (like Miscellaneous, this provides a small buffer)
- Beauty
- Entertainment (with others)
- Personal Hobbies
- Car related expenses (small expenses like parking or tolls)
- Local charities
- Other charities



And that's it.  The last category of Variable/Flexible expenses is where I will need to be both creative and disciplined.  In some weeks I will need to rein in work food expenses or skip a takeaway if I want to see a friend the following week.  In every week I need to be thinking ahead and identifying upcoming expenses while also scouting for bargains and sales (especially in the food area as that is the most expensive).

This is all within my control and I need to take comfort with that knowledge.  My budget is a living document. So I will come back and adjust as necessary and I am very fortunate to be able to do so.

Pru