Do you have an overall idea of how much money you spend each month? If so, this is a good thing because it means you have a budget in place. But believe it or not, this is far from the end all. If you really want to understand what is going on with your money you need to take a look at the big picture. And in order to do this you need to build an annual budget. This may seem like overkill, but the nice thing about an annual budget is that it gives you an overview of the entire year as opposed to one small piece of the puzzle.

You may be thinking: why do I need an annual budget? Simply put, you want to know how much something costs per year rather than just per month. When you look at your budget from an annual point of view you will see just how much you are spending. There is a good chance that this will open your eyes to some things you don’t like, as well as some you are proud of.

Take for instance your car payment. Many people shop for a car based on the monthly payment. And as you know this is the number you will use when calculating your monthly budget. You may look at a $700/month car payment and never think twice. After all, you have the money for this, right? But when you take a look at this within your annual budget you will see you are paying $8,400 per year for your car. Now what do you think about this purchase? By looking at the big picture you may think twice about where your money is going.

Most people never understand the importance of an annual budget until they finally decide to build one. It is at this point that they eventually see how much money they are spending, and what needs to be changed sooner rather than later.

It is important to get a complete view of your finances, and the best way you can do this is to build an annual budget.