Every January 1st, I sit down to review our family’s budget—a tradition I look forward to. While reflecting on the past is useful, the real purpose of budgeting is to guide decisions in the moment and plan for the future. We use You Need a Budget (YNAB) to keep things on track.
So what are we looking forward to in 2025? Our budget has increased, which gives us more cushion for things like the rising costs of groceries. We've got our giving up to around 15% and can hopefully continue to increase that. We've also increased our saving to about 16%. We've set aside money to go back to NY in 2025!
Looking back on last year’s spending gives us the insights we need to set realistic and intentional goals for the year ahead.
1) The past few years have each brought unique circumstances that impacted our finances. To get a clearer picture, I’ve adjusted the year-over-year income and expenses by excluding unusual events. For example, 2023 was marked by significant purchases—a car, camper, and home—while 2024 included the installation of solar panels. Since these aren’t recurring expenses, I’ve removed them from the analysis to ensure the data reflects our typical financial patterns.
2) Housing: This expense was almost identical to 2023 (only a $400 difference). In 2023 we were renting for part of the year while waiting for our house to be finished. However, this extra cost was matched in 2024 with higher property taxes and homeowner's insurance. Our electric bill and water bill are down (we installed solar and have a well and septic system now). We spent about half on repairs and maintenance and furnishings (hopefully the associated costs with moving are now behind us).
3) Groceries. I am shocked that groceries went DOWN in 2024 (by 2%). We were using a meal plan for 10 months in 2023 and only 6 months in 2024... so this makes sense. Eating out went down as well (20%). We eat out far less than the average ($38 per person per month). We eat out only 4 times a month and buy all the kids snacks in bulk at Costco.
Advice: 10 out of 10 people spend more eating out than they think they do. In my experience, this is the main category people could cut in order to save money. Buying groceries is cheaper and usually healthier than eating out too.
4) Vehicle expenses (gas, tolls, insurance, repairs) went up 9.5% which is much better than the 60% it jumped in 2023. 2023 saw some major changes from 2022, but 2024 remained pretty consistent. Our oldest son turns 15 in 2025... I'm not looking forward to this category next year as our insurance will take a major hit I'm sure!
Advice: Buy used cars, not new. Let someone else take that depreciation hit… if you do want a new car, hang on to it for 10+ years and you’ll probably be alright. Don't borrow money if possible. Check out this blog post or this video to learn how to avoid car debt.
5) Other observations: Entertainment jumped quite a bit at 38%. Vacations stayed fairly similar but Tiffany and I each spent a good amount more from our "his" and "hers" buckets. We did increase what we budgeted for these in 2024, so that makes sense. Family entertainment also included the purchase of a new puppy. Medical went up 75% - another kid got braces! Our other miscellaneous category dropped 31% (after dropping 58% last year), which is great! I hate that category. I like to be able to get things into a more specific category if I can.
6) Overall income was up 19% and spending was up only 3.3%. Business continues to grow and there are a few things planned for 2025 that will hopefully continue that trend. I'm glad that our spending increase has not kept pace with our income increase (lifestyle creep is real). Overall we were able to put more towards medium and long term saving (like the Europe trip we are saving for that will happen in 2026 or 2027 hopefully).
-Brad
I enjoy helping individuals with tax preparation and tax planning as well as offering financial coaching to individuals (and businesses) looking to overcome challenges and reach their financial dreams. I also service businesses (including nonprofits and churches) by providing tax preparation and tax planning as well as consulting for accounting, bookkeeping, and other finance related questions. I live in Orlando, FL, but I serve clients all across the country. Contact us if you need assistance and take a look at the resource page.
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**This blog post was created with the assistance of artificial intelligence, edited by me, and expresses my personal opinions on the subject matter.
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