How to Use an Annual Plan to Run an Effective Household

An annual plan lays out meals, expenses, and chores a year out. It reduces decision fatigue, helping you manage a more effective household.

Photo by Marissa Grootes on Unsplash

According to The Motley Fool, the average consumer visits Target 43 times per year, spending around $50 per visit. That might not seem like a lot but that totals up to a whopping $2,150 per year. If you’re earning $50,000 a year, that’s about 4% of your salary spent at one store.

Multiply that by every store you visit on a regular basis and that’ll tell you where all your money is going.

Shopping isn’t inherently a bad thing. In fact, our consumer-centric model of capitalism depends on it.

The problem is that stores aren’t designed to meet your immediate needs. They are planned around behavioral human psychology to extract as much money from you as possible. That means every time you step foot inside a store, you’re at risk of spending way more money than you intend to.

Personal finance gurus will tell you to be disciplined. You should create a list and use sheer willpower to stick to it. While that makes sense in theory, it doesn’t work in practice. The more you fail to stick to your list the more you’ll feel defeated.

The solution isn’t to test your willpower on a weekly basis, it’s to eliminate the need to do so in the first place. That means reducing the number of trips you make to stores altogether.

To do that, you need to overhaul your relationship with spending money and your identity as a consumer. Rather than shopping with a list on an as-needed basis you need to start shopping to an intentional plan. Just like a company develops a financial plan to guide their business decisions, you, the consumer, need an annual plan to tell you how to spend your money.

This article will dive into how to do just that. It will introduce the framework of an annual plan. It argues that by shopping strategically rather than habitually on the weekends, you’ll become a more conscious consumer with more resources at your disposal to live the life you want to live.

An annual plan is just that, a plan outlining how you will manage money, meals, household chores, and activities over the course of a year.

Almost every business has some sort of plan that they adhere to throughout the year. That plan determines department budgets, how many new personnel can be hired, and what marketing channels a business is going to strategically invest in.

If you think about this from the perspective of your day job it makes sense. You might even be in a management role where you’re responsible for justifying and executing your team’s share of the annual budget.

But when it comes to managing a household we don’t do this. A neverending list of chores becomes a source of conflict between ourselves and our loved ones. Meanwhile most of us can relate to the constant struggle to live within our means.

The good news is, it doesn’t have to be this way.

To effectively manage a household, you need to allocate time and resources to getting things done. This includes getting laundry on the calendar — just like you would at a Zoom meeting for work — or earmarking the amount of funds you need to set aside to feed yourself throughout the year.

You might already do this on a daily, weekly, or monthly basis. For me, I work from home on Tuesdays because Tuesday is laundry day. And while I’m far from perfect at meal planning, I strive to set a weekly schedule before venturing to the grocery store.

An annual plan is taking your existing process for managing your household but scaling it across the entire year. Think of it as a 52-week schedule that determines how you’re going to run your household over the course of a year. This includes the regular chores that need done, the meals you plan to make, the state of your pantry, and how you plan to resource it all.

Rather than being frustrated that dishes have been left in the sink or angry at yourself for going over your grocery budget yet again, an annual plan gives you the flexibility to dial up or down your spending and time allocation as the year progresses.

Planning tasks a year in advance gets them on your calendar, eliminating the risk of decision fatigue. By resourcing them up front, you can lower your costs throughout the year.

A lot of people think artificial intelligence is going to be a game changer because it will do our jobs for us. That’s not quite true.

AI is going to revolutionize the world because it will make decisions better and faster than any of us can.

Let me give you an example. I keep a pretty robust food inventory and recipe database in Notion. Using the information I already have in Notion as source data, I can ask the AI-assisted search tool recommendations for what I should make for dinner based on ingredients I have in my refrigerator:

AI eliminates one of the biggest things that affects our quality of life at home and how much money we spend — decision fatigue.

Creating an annual plan gives an AI assistant — whether that’s ChatGPT, Notion, or some other tool — a source of data to guide you throughout the year. That assistance will help you manage your household more efficiently, freeing up time and money to use on other things — new hobbies, vacations, or the freedom to leave your job.

To create an annual plan, outline 52-weeks worth of meals, spending, and activities.

When you’re ready to create an annual plan, you want to outline 52 weeks worth of meals, spending, and activities like chores right up front. These are the three basic domains within the average household.

While you don’t have to religiously stick to your plan, by knowing how you plan to spend the year up front, you can take advantage of bulk buying — lowering your costs — and time blocking — putting boundaries around your time. What remains in terms of both time and money is yours to allocate towards things you enjoy.

You won’t have to wonder what you’re going to cook for dinner. And you know which days of the week are chore days and which days are truly designated for rest and relaxation. By planning your household in advance, you give yourself the space you crave to live your life.

Finances

The first step toward creating an annual plan is knowing how much money you have to work with. One of the biggest reasons why people struggle to live within their means is because they have no idea what their means are to begin with.

Here’s what I mean. Let’s say you’re paid $2,500 bimonthly, after taxes. That gives you $5,000 per month to spend on living expenses. You budget for predictable things like rent, groceries, and your phone bill. But what happens when your car breaks down and you’re suddenly stuck with a massive repair bill? Or your computer bites the dust and you need to buy a new one?

It’s easy to plan for recurring expenses, but when unexpected things come up — which they always do — you might not have the wiggle room in your budget to accommodate them.

Finance experts will tell you to create a sinking fund to anticipate these things. The reality is, most Americans don’t have enough cash in the bank to cover current expenses let alone plan for future ones.

By creating an annual plan, you can anticipate irregular expenses that will happen throughout the year and tailor your monthly discretionary spending around what remains.

To do this, I like to break my expenses down into three categories:

• Mandatory

• Obligatory

• Discretionary

Mandatory expenses are things like rent and car insurance. If you fail to pay these expenses there are serious consequences. Too many late rent payments could leave you homeless while failing to pay your car insurance premium could leave you with a suspended license.

Obligatory expenses are things that you’re on the hook to pay but you have some wiggle room. Your car payment, credit card bill, and other debt-related expenses would fall into this category. If you fail to pay your credit card you might get dinged with a late fee and too many missed payments will damage your credit score, but you can choose to not pay it. Something more important is on the line like keeping a roof over your head.

Discretionary expenses is everything else you spend money on. This is your grocery budget, your streaming subscriptions, and shopping excursions. Some of these expenses are fixed — like your monthly Netflix subscription — while others are more within your control — like how many times you order takeout in a given week.

Creating a hierarchy of your living expenses puts you in more control over how you spend your money. Doing this on an annual basis allows you to flow with the natural demands of life rather than striving to stick to a rigid monthly budget.

Here’s what I mean. Let’s go back to the example of someone with a monthly take home income of $5,000 per month. On a yearly basis that equates to $60,000. Your goal with creating an annual plan is not to spend less than $5,000 per month, it’s to spend less than $60,000 by the end of the year.

Let’s say right off the top your rent is $2,000 a month and all of your car-related expenses (minus gas) are $800 per month. On an annual basis that is $33,600 that’s already obligated — or 56% of your income.

You know over the course of the next year you will have to travel for the holidays, your car is due for its next service, and you’ve been invited to at least two weddings. For the sake of example, let’s say all these anticipated expenses will cost you $5,000 in total.

Between your rent, your monthly car expenses, and these irregular — yet anticipated — future expenses, you’ve allocated $38,600 of your income for the year. That leaves you with $21,400.

Go through your mandatory and obligatory expenses. Count up things like insurance premiums, student loan payments, and expected utility bills. Again for the sake of example let’s say all of these total $1,000 per month or $12,000 per year.

That leaves you with $9,400 remaining for your discretionary expenses. This is the pool of money you’ll use to buy groceries, take out, subscriptions, gas, new candles at Target, or take a weekend road trip here and there.

By framing your spending around an annual plan like this, you are empowered to make better decisions around your money. $9,400 per year might seem like a lot but it only amounts to $783 per month. This is the easiest way to gauge whether or not you’re over spending and gives you a way to do something about it.

To create an annual spending plan you can create a spreadsheet and calculate your expected expenses for the month and irregular expenses for the year. Personally, I use Tiller Money to help me with this. It’s a spreadsheet based budgeting tool that automatically syncs with my bank accounts. I can create an annual budget for the year and it will create an annual spending plan for me. I can evaluate it on a monthly basis and look to see whether or not I’m on target. If I’m overspending I can pull back the following month to compensate.

Meals

Meal planning is arguably the most important thing you should do in your life. Everyone has to eat after all. It doesn’t matter whether you’re following a particular diet or no diet at all, if you fail to plan your meals your stomach will inevitably make decisions for you.

Failing to plan your meals will not only cost you money but years of your life, especially if you rely on unhealthy processed foods to compensate for your ineffective planning. Meal planning is one of the most important things you can do to take control of your waistline — and your wallet.

To get started, take an inventory of your favorite meals and the ingredients for those meals. Make a giant list of all the ingredients you would need to cook your favorite meals.

One of my favorite things to eat is Cuban black beans and rice. It’s nutritious, cheap, and really easy to make.

The ingredients are pretty straightforward:

• Black beans

• Peppers

• Onion

• Rice

Based on my eating habits, I know I will make Cuban black beans and rice at least once a month. Each time I make it, I will need the following quantities of ingredients:

• 1.5 cups dried black beans

• 1 green bell pepper

• 1 onion

• 1 cup uncooked rice

That means to make Cuban rice and beans once a month for an entire year I’ll need:

• 18 cups dried black beans

• 12 bell peppers

• 12 onions

• 12 cups rice

Instead of going to the grocery store every time I need these ingredients I can take advantage of bulk purchasing instead. I can buy a 20 lb bag of rice at Costco and a 25 lb bag of dried beans from a company like Azure Standard. I can do the same thing with perishables like onions and peppers but instead of storing them in a pantry I can chop them up and store them in the freezer until I need them.

Scale this out for an entire year. If you know you’re going to have tacos on Tuesdays and homemade pizza on Thursdays anticipate what you’ll need in advance. Shop to fill an annual pantry inventory rather than shopping every time your stomach growls at you.

Once you have a meal plan sketched out, you can shop for it. This might look like one bulk purchase from Azure Standard at the beginning of the year or it could be quarterly trips to Costco. Do what works for you based on your needs and the amount of space you have to store food.

What’s important is knowing what your food needs are upfront rather than guessing on a daily or weekly basis. If you have $5,000 to spend on food for the year and you’ve allocated $3,000 for groceries, that means you have $2,000 for other things. You could put this towards financial goals — like getting out of debt — you could allocate it toward your daily coffee fund, or you could put it toward a few dinners out at some nice restaurants you’ve been pining after.

(Pro Tip: if you know your spending in advance, you can schedule OpenTable reservations in advance too, always getting the perfect seating).

You can use a spreadsheet to do this or you can make a more robust plan in a tool like Notion. I like Notion because its web clipper extension makes it super easy to save recipes from my favorite food blogs into my recipe database. From there I can use the Notion Calendar to see what my upcoming meals are and use the AI-assisted search to make sure I’m efficiently using perishable ingredients before they go bad.

Chores

The last part of an annual plan is creating a household task list. These are chores you have to perform to maintain your home and the things inside of it.

Chores can be broken up by daily, weekly, monthly, and quarterly tasks. Here are a few examples:

• Daily: load and unload the dishwasher

• Weekly: sweep, mop, and vacuum the floors

• Monthly: clean the bathtub

• Quarterly: trim the hedges and clean the gutters

You can do chores as frequently or infrequently as you want. By planning them in advance, you can schedule when you’re going to do them and make sure you have the right tools and supplies needed to complete each task.

Take laundry as an example. As I mentioned, I do laundry every Tuesday. If I know I’m going to do laundry 52 times per year, I can buy enough laundry detergent to last me the entire year skipping unplanned trips to Target as a result.

And because laundry is one of those things that I can do while I work, by putting it on my calendar I can align my workflow to be flexible with completing the task of doing laundry.

Here’s why this is a big deal. One of the biggest complaints in households — especially between couples living together — is an inequitable distribution of labor toward household chores. The prevailing logic is that women are expected to shoulder the burden of household chores and are uncompensated as a result.

I’m going to challenge this notion. It’s not that women do more, it’s that they fail to plan. By failing to plan they are unable to take advantage of strategic options that could lighten their workload, increasing the value of their “unpaid” labor as a result.

We now live in a society where it’s possible to outsource just about everything. A Roomba can vacuum your floor for you. You can Instacart groceries to your door. You can have a laundry service do your laundry for you. And you can hire a maid to clean your home if you want to skip the odious task of housework altogether.

Household chores are no longer a requirement for either men or women, but they still come with a cost. When you don’t plan your chores out in advance you can’t allocate the time or resources to making sure chores are done.

Here’s a simple example. Let’s say you work the standard American work year of 1,810 hours on a $60,000 take home salary. Your hourly rate is $33 per hour. You spend one hour per week vacuuming and sweeping your floors.

If your time is worth $33 per hour and you spend 52 hours per year cleaning your floors that chore is costing you $1,716. A Roomba is a couple hundred dollars. Just by planning out your weekly chores and looking at the annual cost of labor associated with it, you can make the strategic decision to outsource one task — cleaning floors — to a robot.

And if you know that’s something you want to do, by planning in advance you can take advantage of end-of-year sales, buying a Roomba for yourself at a steep discount.

The easiest way to create an annual plan to manage your household is to create a list of all of your chores and organize them based on frequency. Determine what you need to accomplish each task. Schedule it out so you know when you’re going to do things. Or, go through the same exercise I just did with the Roomba and determine what tasks you’ll outsource.

The challenge isn’t the chores themselves, it’s carving out the time to plan for them.

How you can take action.

What I just laid out for you is the same logic a business executive would follow when evaluating the performance of a business. They know how much revenue they’re bringing in compared to their operating costs. They know what tools and equipment they need to run an effective operation. They know how many people they have and how many more people they need. They know all of this because businesses operate around annual and multi-year plans.

The question is why don’t we do this for ourselves when it comes to running our own households?

By creating an inventory — whether that’s cooking ingredients or cleaning supplies — you can take advantage of bulk buying. This lowers your costs and eliminates the decision fatigue of what you’re going to cook for dinner.

When you maintain an inventory in your home you reduce the amount of “necessary” trips you need to take to the store. This saves you time and money because you’re not making impulse purchases stores like Target want you to make.

And when you know what chores need to be done around the home and who is responsible for doing them, it eliminates conflict before it even happens. (TBH, I think more men would shoulder the burden of household chores, they’re just waiting for someone to tell them what to do…but that’s just my opinion).

The point of creating an annual plan isn’t to micromanage your life. It’s to eliminate decision fatigue and mitigate conflict. When done correctly, an annual plan is done in advance, assigned, scheduled, and resourced.

What remains is what YOU have left to live your life. It’s the money you have to do the things you want to do and the time to pursue hobbies and passions that are more interesting to you.

If you finish the exercise of creating an annual plan and realize you don’t have enough, that’s a signal for YOU to take action. Maybe that means trimming your discretionary spending. Or maybe it means getting a part-time job.

Regardless of the outcome, an annual plan is the most important tool you can leverage to be able to live a life on your terms. As Benjamin Franklin famously quipped: “if you fail to plan, you plan to fail.”

Carve out some time on your calendar this weekend and build your annual plan. Iterate and tweak it as you go. Rome wasn’t built in a night. Your life won’t be either. The key is getting started.

What do you think? Share how you plan your household in the comments.