Action Tip: If you do your budget off of your net pay, also take a look above that to all of your gross pay deductions.
Start with your federal tax withholdings. I cringe when people brag about how big of a refund they got. If you get a refund that means you withheld too much during the year.
Each paycheck was less than necessary. You went through the year with less money in your pocket for no reason.
You also shouldn’t under-withholding and owe taxes at the end of the year. I used to work with people who would make themselves exempt for much of the year to make their checks bigger, then owe, owe and owe some more at the end of the year. If you’re doing this, this probably means that you need to downsize what’s in your budget, earn more or both.
For the next few days we’ll look at other above the line items.