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💸 Here's How I'm Planning for 2025 💸

💸 Here's How I'm Planning for 2025 💸

My step-by-step money planning process

Ed. Opal
December 09, 2024 • You'll get through this in: 8 minutes

In partnership with

🔍 In this Issue

December Week Two Reflections
Join the Party on December 19
My Annual Money Planning Process
Kwanzaa and Collective Economics

Need to catch up? Read our latest issues here.

This Week’s Money News

👛 Wallet Watch

🟤 It’s week two of December! Here’s the reflection prompt for this week. Read my reflection here.
🟤 Here’s an interesting look at how Democratic policies have negatively impacted Black wealth.
🟤 Erin Perkins examined the best cities for Black women to flourish financially and I’m pretty shocked at which cities made the top 25. Read more here.

Upcoming Events

Join Us Next Week!

Join us on Thursday, December 19th, for the Ed. Opal Planning Party! If you want some cool folks to help you get your money ready for 2025, this is the place for you. Tickets are $25.00. Get 50% off if you’re bringing a friend! Sign up here.

Fiscal Focus

💸 Here’s My Annual Money Planning Practice

As you all know, I’m deep in reflection and planning mode. Every year, I take this time to review what’s working for me and what’s not so I can adjust to meet my goals for the coming year. Here’s my step-by-step for how I do my annual money planning practice. We can do this together if you like! Ed. Opal is hosting a planning party dedicated to this next Thursday. Join us and get your money ready to go for 2025.

1️⃣ Step 1 | Gather My Materials
Before I get into this, I try to set myself up for success. Addressing personal finance can feel really stressful, so I make sure to make the process as enjoyable as possible for myself. I grab my favorite highlighters and pens, light a candle or oil burner, and get my space cozy and ready for action.

2️⃣ Step 2 | Print Out My Statements
I print out my pay and bank statements from September 1 to November 30, the last three full months. Once I started getting bonuses, I began printing out the previous three statements for those as well.

3️⃣ Step 3 | Calculate My Average Monthly Income and Average Annual Bonus Payouts
During this step, I calculate my gross (total, in my case, minus equity grants) income and net (income after taxes and deductions) income by averaging the amounts in the last three pay statements. Keep in mind that I’m a salaried employee now, so my pay doesn’t fluctuate that much anymore. When I was hourly, there was more fluctuation month-to-month. If you’re an hourly employee or self-employed, you may notice more fluctuation, which is why it is essential to get an average.

I also calculate the gross and net income from my bonuses. Although I usually don’t plan my year with my bonuses in mind, I like to have an idea of the total income I can expect for the year.

I calculate both gross and net income because I like to know how much of my paycheck I’m keeping in case I need to consider new tax implications in the coming year.

4️⃣ Step 4 | Calculate Expenses
Now, it’s time to take a look at expenses. For this step, I start with my gotta-have’s. These are things I can’t eliminate from my budget, such as rent, utilities, car insurance, and groceries. Some of these expenses are varied, like my electricity bill. In this case, I take the last three months of payments to get a good average.

While I can’t eliminate these expenses, I can reevaluate some of them. For instance, one year, I realized my phone bill was higher than needed. I called Verizon and found a better-priced plan that still allowed me all the features and functions that I needed from my mobile carrier.

5️⃣ Step 5 | My Power Number
After all that work, I can arrive at my monthly and annual power numbers. This is the money I have leftover once I subtract my gotta-haves from my income. This is the money I get to put to work for myself to help me reach my goals and engage in my interests. This money covers everything else in my budget: building my emergency fund, travel, a night out with the girls, you name it.

Remember, I didn’t take into consideration annual bonuses when doing these monthly and yearly calculations, so that money will be an additional sum of funds that I can use to max out my 401(k), beef up my emergency fund, invest in the market, or tackle all three of those things!

Another quick tip: If you’re paid bi-monthly, there will always be two months out of the year when you get three paychecks instead of two. Check your pay cycles to see which months these are for you. When I was paying off credit card debt, I used those additional paychecks toward that effort. Now, I use them for extra savings or investing.

I’d love you to join me this year in this planning process. I’m hosting a Planning Party next Thursday for those who are interested. I’ll even share a quick template to help make the calculations easy. Learn more and get tickets here.

Happy planning! 🎉

Vocab, Mindfulness, and Quick Facts

💰 My Final Two Cents

💬 Money Vocabulary:
Gross Income: Gross income for an individual—also known as gross pay when it’s on a paycheck—is an individual’s total earnings before taxes or other deductions. Read more here.

🧘🏾‍♀️ Mindful Money Prompt:
Check out the 2024 reflection prompts here.

📠 Money Quick Fact:
Kwanzaa is coming up, and I didn’t realize that Ujamaa, the fourth principal of Kwanzaa, is all about Cooperative Economics. Created in 1966 by Dr. Maulana Karenga, Kwanzaa is celebrated from December 26 to January 1, with Ujamaa celebrated on the fourth day. Read more here.

Celebration Syndicate

🎉 Introducing a New Way to Celebrate You

Did you get a higher-paying job, pay off a credit card, or meet a savings goal? No matter what your money accomplishment is, we want to celebrate you! Share your money wins here for a chance to have them featured in future newsletters and on Ed. Opal socials!

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