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Did you reach any of your money goals in 2021?
The new year is a great time to reflect on your goals and set new goals for 2022.
But reflecting on your 2021 money goals is hard without an annual budget template.
The good news is doing an annual or monthly budget review is pretty simple once you have the right tools for the job.
I can teach you how to set goals and how to use a zero based budgeting template to help you reach all of your financial goals in 2022 and reflect on your process.
A good budget reflects your values, goals, and priorities.
This budget review should help you set up your own budget template and do monthly and annual budget reviews.
An Annual Budget Review Puts Your Spending into Perspective
I’m always BLOWN AWAY by how we spend our money every year. Of course I can track my spending every month in our easy to use zero based budgeting template, but there’s something about seeing a year’s worth of expenses and savings in a single graph.
I love creating a “top 10” list every year that highlights our ten largest spending categories for the year.
I told my wife we sent $21,725 to savings in 2021 and her jaw dropped! This number shows we place a HUGE value on savings. Savings has actually been our highest budgeting expense every year since 2019 and it’s been in our top 5 since 2015. Even in my first budget we made a priority to save money.
We’ve built our budget around our values and priorities, and our annual budget review helps us stay focused on saving money, and reflect on our progress.
What is a Budget Review?
A budget review is the process of analyzing your expenses to see where your money is going.
You can do this annually or monthly. I recommend doing both.
A huge principle in budgeting is to plan out how you want to spend your money in advance and then use your budget to stick to that plan.
And a budget doesn’t have to be scary. When you create a budget, you’re creating an intentional plan for how you want to spend your money. It should be based on your goals, values, and priorities.
After you set up your budget, you use your budget spreadsheet to track your progress toward your goals. A budget review helps you stay focused and on track.
Most importantly, a budget review helps you make adjustments if your spending doesn’t align with your goals.
If you prefer video content, watch how I do our annual budget review step by step.
Why You Should do an Annual Budget Review
It’s easy to waste money on things you don’t care about. Everyone is guilty of this.
Take a minute and think about your spending in the last few weeks. Are there any expenses you feel a little bit of buyers remorse over? Or maybe you spent money that was intended to be saved?
I get it. It happens. We do it too.
That’s why it’s so important to consistently do a budget review.
When you review your budget, you know exactly where your money is going and can course correct when you’re not spending money according to your goals and priorities.
A Budget Review Starts with Setting Goals You Care About
Okay. Right now it might be hard to reflect on your spending in 2021 for a couple reasons.
- you forgot to set concrete money goals
- you didn’t use a zero based budgeting template to track your spending
If that’s you, no problem. You can start 2022 by setting goals you care about. Make a messy brainstorm of all the money goals you have for 2022. Here are a few to get you started:
- pay off all your debt (use my free debt snowball spreadsheet to help you. Click here to download)
- save $5,000 for retirement
- go on a family vacation
- home improvement projects
- buy a new house
- create a $10,000 emergency fund
- save $2,000 to avoid car repair debt
Think about what matters to you and set specific goals, and WRITE THEM DOWN! When you write down your goals, you always have a reference point to come back to.
Then at the end of 2022 you can do your annual budget review to see if you reached your goals and spent your money according to your priorities.
Should I do a Monthly Budget Review
YES! Absolutely. A monthly budget review is a great practice for an annual budget review. And I’d argue monthly budget reviews are MORE important than an annual budget review.
When you review your budget every month, you can consistently reorient your spending around your goals and priorities.
Let me give you an example.
At the end of March, you realize you’re going out to eat a lot. Dining out isn’t necessarily a big priority or value for you, but out of ease and simplicity, you spent $500 eating out. As a result, you only transferred $100 to savings instead of the $400 you planned for.
If you take the time to reflect on your spending at the end of the month, you can quickly make adjustments to eat out less and transfer more money to savings.
But if you only review your budget at the end of the year, you could go the entire year overspending in a bunch of budget categories and neglect your savings.
Chances are you repeat this process every year and are consistently frustrated that you can’t save money.
The better route is to use a budget template and consistently review your budget to focus your spending on what you really care about.
One of my popular products is a Budget Workbook. It has everything you need to set up your budget, set goals, and help keep your finances a priority this year.
My Budget Review Process
I made a simple to follow Budget Review Guide you can download for free. It has 5 simple steps that anyone can follow. You just need a zero based budgeting template to get started. Grab my monthly budget or annual budget for $5.
Here are the 5 steps, which are explained in more detail in the Budget Review Guide linked above:
- Look at your budget to see how much you spent in each budget category
- Identify your 10 biggest spending categories
- Find the percentage of your budget spent on your budget categories
- Analyze the results – did your spending reflect your true goals and priorities?
- Compare your spending to your values and goals and make changes
And I’ll add one BONUS step – set new goals for 2022
Download the guide, set up your annual or monthly budget template, and get in the habit of reviewing your budget often.
Our 2021 Budget Review and Analysis
One of my favorite parts of doing a budget review is seeing our progress.
You can see progress over a month, over a year, and over many years. I’ve done a budget review every year since 2014, except for 2020. I totally forgot to do an annual budget review in 2020, which is an epic budgeting fail for me, but it’s okay. I still have our budget, and if I wanted, I could look at our expenses and review our goals in just a few minutes.
So without further ado, here is our “Top 10” budget expenses for 2021.
There are a few necessary expenses on this list like mortgage, our phone bill, and heating utilities. But for the most part, our 2021 reflected a lot of our big money goals and priorities.
Here’s what stands out to me:
- $21,725 to savings
- $10,900 focused on tithing and giving
- almost $10,000 to various investments
We’ve always made it a priority to save money and tithe when in debt, and especially now that we’re debt free. I’m proud of our intentionality about that over the years.
I can also see a few possible adjustments for next year. Our phone bill seems out of control. We upgraded our phone plan to unlimited data and Jenna got a new phone too. Those definitely increased our phone expenses, but maybe we could shop around for a lower plan and move away from Verizon.
If we could save money on our phone plan, that means more money for our savings goals and sinking funds or more money for our hobbies and fun experiences. We’ll probably go on a bunch of dates and use our go to list of cheap date ideas to save a bit of money too. A big focus for us is enjoying our money instead of being so strict that we start to resent our money and budget.
Overall, I’m really happy with our budget and money priorities in 2021.
New Budget Priorities in 2022
I already touched on this a bit before, but I think it’s important to end with future goals.
In 2022, we want to prioritize our money to accomplish a few big goals.
- Bathroom renovation
- Possible bedroom renovation
- New roof
- Save $10k for new house
- One extravagant purchase for each of us
- Go on two or more vacations
Knowing what our goals are, we both know our income is going to need to increase and we’ll still need to be intentional with our spending. We have a plan for increasing our income this year too. My wife’s new salary with her master’s degree will definitely help.
Prioritizing our budget around these big goals will help us stay focused and avoid spending money on things we don’t care about.
We still want to have fun, enjoy hobbies, and create great family memories. But we can do those things with an intense focus on our big goals.
After I do an annual budget review, I take a few minutes to set up my NEW BUDGET for the next year. If you use my annual budget spreadsheet, you can follow the process in this video to set up your new budget for 2022.
How You Can Set Up Your Family Budget
Okay, now it’s your turn. You’ve seen our big money goals and how we’ve used our budget to prioritize reaching our goals.
Here are 3 simple things you can do to set yourself up for an awesome 2022:
- Create a zero based budgeting template (monthly budget or annual budget)
- Set big money goals you care about
- Review your budget at the end of every month
- Make adjustments as needed
If getting out of debt is on your goal list, download a free debt snowball spreadsheet to create an organized plan to pay off debt like crazy in 2022. You can also read this article on how to make a debt snowball spreadsheet.