Johnny and I have set some financial goals for 2013. And the key to sticking to those goals will be tracking every expense and sticking to our budget.
Our First Budget
When we first started tracking our expenses a few years ago, it was kind of tricky, as well as frustrating. We weren’t quite sure what a reasonable amount of money was for certain expenses, such as groceries. And we disagreed on how much should be budgeted for certain categories, such as hair salons, for example. That very first month was basically trial and error. We were determined (Johnny more than me) to stay completely within budget, even if it killed us. And based on the ramen and cereal we subsisted on the last couple days that month, I felt like it almost did.
But it got easier after the first month. We gave ourselves a little more money for food, a little less money for something else, etc., until we found a sustainable balance. I still remember the exhilarating feeling of sticking perfectly to a budget that first month. It was totally worth the night of grudgingly eating a PB&J for dinner.
Our Budget Today
Since then we have tracked our expenses almost every month. A couple times we’ve fallen off the ol’ budgeting horse, but inevitably we climb right back on the next month. Sometimes we’re more motivated than before, and sometimes we’re dragging our feet. But we climb back on no matter what.
Which brings us to today, and onto some actual numbers. When we start a new budget each month, we try to find a place for every single dollar. So what does that end up looking like? Here’s what our budgeted expenses look like for a typical month.
Our January 2013 Budget
Everything Else: $550
Total Expenses: $2878
Church/Charitable Donations: 10% of gross income
Savings: 35% of net income
Pre-Tax Retirement Savings: 8% of gross income
And a Few Notes
- Rather than budget every single item out, we have an “Everything Else” category for all the expenses that can vary from month to month. As long as we stay below the total amount budgeted for that category, the money can be spent where needed each month. Some months it will mostly go to an unexpected medical expense; another month a big chunk will go to clothing or hair (read: MY hair). But we make sure the total money allotted to that category is never exceeded. The flexibility that comes with doing our budget this way has made it much easier to stay within our spending limits, and it has drastically cut down on disagreements. Win win!
- Our budget gets tweaked from month to month to account for variables such as siblings’ birthdays, weekend road trips, holidays, etc.
- For expenses that change unpredictably, such as utilities, we budget a little more than we’ve ever actually needed so that it never hurts us if a bill is unexpectedly high one month.
So that’s our January budget. Some things may change each month, but for the most part, that’s the budget we’ll be trying to stick to each month of 2013.
Do you follow a monthly budget? How do our expenses line up with your own? In which categories do you spend more or less?