We didn’t stumble on our blog name by chance. After all, it’s pretty long, weird, and includes a quasi-obscenity that was banned in both of our households as kids (sorry moms!). But the reality is there was no other name as fitting for our blog than the darned thing that was most responsible for getting our financial lives in order: our freaking budget.
Everything starts with a budget. As Dave Ramsey preaches, budgeting gives every dollar a name. You’re in control of your money’s destiny for that month. We’ve found that the months we haven’t kept a budget, all we can do is hope that we’ve stayed out of red at month’s end. And that’s a terrible feeling month after month. So we cleaned up our act and started keeping one faithfully a few years ago. That doesn’t mean every month is rosy posy (is that even a saying? Let’s pretend it is. Thanks). We’ve had a tougher time tracking our expenses since Baby Girl’s arrival, but this is our call to repentance. It’s time to shape up or ship ou… that doesn’t make sense either. I’m done with sayings in this post.
A few months ago, we shared our monthly budget for January. Since we’ve got a few new readers here now (howdy, folks), we figured we’d share our budget for the start of the second quarter of 2013. Any changes from our January budget are noted in parenthesis.
Our April 2013 (Q2) Budget
|Rent: $1300Utilities: $465
Everything Else: $550
Total Expenses: $2835 (-$43)
Church/Charitable Donations: 10% of gross income
Savings: 35% of net income
Pre-Tax Retirement Savings: 8% of gross income
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. 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. Some months it might go to an unexpected medical expense; another month a big chunk will go to clothing or hair (read: Joanna’s hair). But we make sure the total money allotted to that category is never exceeded.
- 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.
- To keep track of our budget, we use HomeBudget for iPhone. The app syncs with both of our phones so it’s always up-to-date and ready for budgeting madness on-the-go. It costs $5 (which is the first app we’ve actually ever purchased), but it’s been worth every penny.
Changes to Our Budget
Things shifted a lot more than usual between our January and April numbers. In utilities, warmer weather means less gas/heating, so we gained a few bucks there. But our water bill is on the up and up as a result of more laundry thanks to Baby Girl’s propensity to poo and pee on herself and us whenever we remove her diaper. Joy. And then I looked into and successfully enrolled in our work’s cell phone reimbursement plan for an extra $50/month. Boom goes the dynamite.
On the food front, we’ve shifted some grocery money over to eating out money to ease up the burden on cooking/making lunches for these first few post-birth zombie months. But that number will likely start to shift back to more grocery spending through the months.
Perhaps most surprising is that our Everything Else category hasn’t changed, despite all of the new baby expenses (diapers, toys, 6-month outfits for our not-even-3-month old 95th% height/weight beast baby, etc.). While those have definitely increased, our entertainment and personal expenses have never been lower. So I guess that’s an unplanned perk of having a baby. We’ve also entered the birthday drought of the year for our families, so we only have one or two gifts to buy over the next five months.
How’s your monthly budgeting going? How does our April budget line up with yours? In which categories do you spend more or less?
Our water bill is heading down again – should be about $20 less moving forward, yay! But as it gets hotter and we start using the AC more, it’ll eat up that $20 savings in no time.
We try to hold off as long as we can before turning on the A/C. Last summer, we lasted until July in Boston — and we regretted it. But it’s awesome if you can offset the cost with water savings. That’s our hope this upcoming summer.
We keep a logical separation of our monies as well. After we pay all of our bill and put x amount into savings/retirement, we then put the rest into a “want”, and a “need” account. We don’t budget though, we practice conscious spending. You guys scared me for a minute when I saw that you spent more on eating out in a month than groceries, but you said you’re going to fix that? Please fix that. For MY sanity at least.
Our budget is more of a backup plan should our conscious spending slip into unconsciousness during the month. And the eating out should be a temporary fix for our time/sanity’s sake. So while our grocery budget will likely absorb more and more of our eating out budget over time, you won’t be seeing a juice-only-diet budget on here. That there is for crazy folks. 🙂
Haha touche! My wife is actually still on that diet. She’s been going 15 days strong now. Talk about crazy..
My budget took a hit due to a plane ticket (to visit friends later in the year) and some plants for the apartment (because my place still looks sterile). Another big hit will be coming in a few months for car repairs. Eventually summer will get here and I’ll start getting out and taking day trips. Hopefully, my budget will survive that.
It’s nice to disperse those big hits throughout the year to lessen the blow. We’ve got some plane ticket purchases coming up for Christmas flights, but our credit card reward miles should cover it. If it weren’t for those, I don’t know if we’d ever fly.
I have an idea of what I am spending and check in weekly with mint, my bank account and my credit card. I created an excel spreadsheet of what I expect to spend and where when I start new job and the categories are fairly similar to yours. For now, I just try to talk myself out of unnecessary purchases and save when I can. We shall see how it goes once I re-enter the real world and leave school behind. I’ll be sure to budget for bi-annual nice hair cuts though 🙂
Everyone’s got a system that works for them. We tend to be super strict with keeping track of expenses because we know our personalities need it. Give yourself a few months in the “real world” of trial and error with your budget. We were way too hard on ourselves with getting it perfect from the get-go.
My wife and I were discussing our spending this weekend and noted a few unexpected bonuses to having a baby. Our gas bill is way down as my wife has been home with our son and I continue to take the bus to work. Our food/grocery budget is also down on account of generous family/friends who have offered meals (and the crockpot! So money!).
It’s been an amazing 8 weeks and budgeting is hard to do between feeding/changing/sleeping, but those unexpected changes have made the transition to parenthood a bit easier!
Yes! Those first few weeks of free meals and hunkering down in the house with going anywhere did our budget wonders. And man oh man do we know the frustration of trying to get anything other than baby stuff done those first few weeks. It definitely gets easier. And once you start getting smiles from your little one, everything is right in the world. 🙂
It’s great that you guys are saving such a large percentage of your net income, even after baby girl’s arrival.
We keep a fairly detailed budget as well. It’s the only way we can really know how much we’re spending on fun stuff versus needs. Even if we decide to still spend on fun stuff, at least we know where there is room to trim if needed.
By the way, I just put up a post on mortgage rates. I know you guys are weighing options as to when to buy a home, as are we. The exercise didn’t leave me with perfect clarity, but it did help us better understand the impact of interest rates
We’re really surprised how little a baby has put a dent into our budget. I know that incur more expenses as she gets older, but for now, things are going swimmingly in that department.
Loved the post on mortgage rates. We’ll be including it in our Weekly Wrap-up so others can benefit from your number crunching.
I’m so glad that post was helpful! I had fun crunching the numbers (gosh, I’m a nerd) and figured it might be of interest to others. And it’s so nice of you to feature me in your weekly round-up. I’m truly honored!
By the way, I’m more than happy to share my Excel template if you’d like to play around with the scenarios and customize the numbers for options that you might be considering. Just let me know and I’ll send it your way
Oooo, please do. That would be so awesome. Please send it to general [at] ourfreakingbudget.com. Thanks so much!
Awesome job! Your car insurance is so low compared to a 2-car family.. that scooter is paying off!
I’m curious – does the 8% of gross income retirement savings go into a 401K for you, Johnny? Even if Johanna’s not working at the moment, she can also contribute to a spousal IRA with your income. Are you guys splitting your retirement contributions or is it going into one account?
I am so bad at budgeting down to the penny, so I’m going to give your Everything Else category a try.
So the 8% represents 5% of my income (401k) and 6% of Joanna’s income (403b…which is basically a 401k). Joanna is back to work now so she’s contributing to that again. And then we’re gearing up to start contributing to a Roth IRA. We were waiting to fully fund our Emergency Fund and 401k’s.
Everything Else has been a huge stress-relief for us. It’s helped us focus less on the variable, unexpected costs and look at those expenses more holistically. Give it a shot and see how you like it.
So I just stumbled across your blog today and I love it! I am so inspired to start keeping a monthly budget again…I started one a few years ago, but when I had my son, everything went out the window and I do just pray I stay in the black every month, which like you said, is a terrible feeling. And our utilities are SUPER hard to budget right now, because of changing rates, so I hope that calms down soon too.
We’re glad you stumbled on it, too! Budgeting is a tough horse to jump back on, but it’s totally worth it. What we’ve noticed is that keeping a budget not only helps us financially, but it really alleviates a ton of unnecessary worrying. Utilities are always tough to gauge, so we always aim high and hope that we’ll end up with some extra in savings.
Good luck kickstarting it again!
Our budget is kind of similar to yours and is around $3,000 to $3,200 per month (that includes both new cars!). We are working on lowering our food budget and eating more healthy food though. If I ever want to be self employed, then we need to start saving even more though! I need to add a “self employment savings” line to our budget 🙂
I’d love to start saving toward self-employment savings, but we’re not quite at rockstar side gig status like you. 🙂 It’s an awesome goal to work toward, though.
I just found your blog through Lean Green Bean’s shout out post and I love it! I am super tight with my money, am a broke college student, and starting this summer I will be renting an apartment for the first time. I’m sure your blog will come in handy from time to time!
Thanks, Danielle! We know that situation all too well, having been there and done that just a few years ago. Glad you stopped on by!
Is the 35% savings for retirement? Or is it for future large purchases (house down payment, car, college)? How do you guys decide how much to save for retirement and whether it will be enough or not?
For me, I try to save 15% for retirement, and the rest is going towards a house down payment, but here in CA, I don’t know that I will ever be able to save up $100k for a down payment on even a small 2 BR condo. Maybe I should just rent forever…
The 35% is being saved for a 20% house down payment at some point in the next few years. We’ve only been contributing the 8% of 401k/403b for the time being, but now that our Emergency Fund is fully funded, we’d like to contribute another 7% to Roth IRA’s to get to that magic 15% (like you).
I’m from LA and the housing costs out there have kept us at bay. It’s a shame because I would love to move back to CA. But at the end of the day, being a renter really isn’t the worst thing in the world. Some aspects of home ownership (property taxes, PMI, maintenance, etc.) sound really lousy and I wonder why we’re so anxious to buy.
Having kept detailed records of our expenses over the years, I’ve been able to budget things pretty accurately. We’ve found that it’s best if one of us maintains our monthly budget but also ensure that the other is made aware of the details and reasoning behind certain budgeted items. In addition to a monthly spreadsheet budget (of budget vs actual vs variance), I also transcribe it into a yearly spreadsheet, broken out by month, since experience has shown that certain expenses may only come due at specific times of the year. Comparing to previous years, I’m then able to anticipate and plan accordingly.
Although we may pay a few extra “service charge” costs we prefer (for ease of stable fixed budgeting) to spread as many expenses equally as possible over 12 months, rather than make yearly single lump sum payments (which, depending on circumstances, might not always be at preferred times). So this would include things like: utility costs, house / life insurance premiums, etc.
Also we tend to put a certain amount of our monthly savings aside for things like:
unplanned emergencies, car replacement, birthday / Christmas expenses, etc. It just makes it easier than trying to find a large amount all at once that might not have been anticipated.
All in all I have to really compliment you guys on your budget. Keep up the good work.
I think you’re more organized than me with paperwork/budgeting, Rob. And Joanna can attest, that’s hard to do. Your 12 month vs. lump sum payments is an interesting strategy. I’ve always done lump sum to save some dough, but account for the money lost over the course of the year even though no money is actually leaving our account. I really like the idea of just having a slush fund for the birthday/unexpected emergencies/etc., because those costs always throw our perfect little months off. Doesn’t life realize we’re trying to keep a budget here?!
Super impressed by your low personal allowances! I don’t have fun money myself and don’t want/need it, but T has an allowance of his own and that’s usually $40-60 a week (way too high for my liking but it’s all about compromise).
That’s a pretty generous allowance. It might help if he set it to a single amount per month instead of per week. Doing things a month at a time helps to learn how to stretch money for longer periods of time. But compromise is compromise. Hopefully he’s using some of that dough on flowers and chocolates to show his appreciation for your compromise. 🙂
BUDGET!!!! Looks legit, diggin’ it. May I ask what your savings is for? Do you have savings buckets (targeted savings accounts), or is it just a lump sum savings account? And our spending cash is definitely on par with that, except now our 1 yo kiddo has a category as well. Don’t worry, it’s not an allowance. I’m going to put him to work. His job is mostly taking every toy out of his basket and every book off the shelf and throwing them about the living room and right at the bottom of the stairs for me to step on. Has definitely been earning his keep 😉
Right now, all of our savings are going into one paltry 0.85% interest savings account. That money is being kept for a 20% home downpayment at some point in the next few years. In the next few months, I’m going to start creating some savings buckets to be a little more agressive with our goals.
Hahah. That’s awesome. He sounds like a really dependable worker.
Hey, want comes out of your “personal” budgets??? We have personal budgets as well…and any sort of entertainment, sports item, drinks with friends, etc comes out of those budgets if we don’t do them together as a couple. I’m really excited if “Personal” means the same for you as it does for us, because your number is crazy low! We started ours at $50/month, and then increased it to $70 after I got a raise. My friends think I’m crazy, but I really like that it forces me to prioritize how I spend my money!
So our “Personal” budget is the money that we’re allotted to spend without consulting each other. So if Joanna wants to buy an eBook, she can buy it with that money. If I want to buy a record album, I can do it no questions asked. That’s not to say that’s the only “fun money” we give ourselves throughout the month. In our Everything Else category, we’re allowed to spend money on entertainment (Red Box rentals, concerts, bowling, etc.), but all of that is approved together as a couple. We also give ourselves a joint clothing budget twice a year during spring/summer and fall/winter, so we don’t have to dip into our Personal money for that either.
That system might not work for everyone, but it’s worked for us pretty well.
My budget kind of messed up last month due to the increase in washing clothes for the little man and the increased electricity to do so. I knew it was going to happen, but just didn’t account for the change well enough.
Just like any other major life change, I think budgets with a new born can flux a little here and there for the first few months. For example, I had no idea that all of my shirts would need to be washed/dry cleaned thanks to my shoulder being our girl’s favorite burp rag. It’s a good thing she’s cute.
Here is the solver lining in all this. Once you get to be an old goat like me and you have budgeted your whole life things get easier and somewhat automatic. Stay with this path and you will see big time results.
Haha. That’s the hope, Steven. Thanks for the words of encouragement.
Hey Guys! New reader here. I was looking at your budget and was wondering about babysitting/daycare expenses? I’m sure it’s covered in another post I haven’t gotten to yet so sorry for being lazy right now. Our biggest expense after rent is daycare (it’s 63% of what our rent is and yet sooooo many ppl tell me we’re lucky to pay so little for FT care. Sadly I only need PT care..I work 20 hrs but they dont have it…not many centers do, must be a Jersey thing cuz we had it in NY). Not to metion to keep the marriage fun we do date nights and since we don’t live near family (correction…family that has said yes to babysitting) we budget in a sitter once a in while.
Thanks for stopping by, Jessica! And that’s a really good question that probably deserves a post sometime in the near future. Joanna works full-time from home and has miraculously been able to juggle both for these first few months. Her work is mostly project-based, so as long as she gets the projects in by deadline, she’s good. We realize it’s a pretty fortunate and rare situation. But now that we’re just starting to get back into having a life, we’ll likely need to figure out a budget for babysitting. The one or two times we’ve gone out, we’ve dropped her off at a friend’s house who also have a newborn. And then in a week or so, we’ll cover babysitting for them for their date night. But who knows how sustainable that will be over time.
That’s crazy that there’s no way to get them to do PT care instead of FT. I wonder if you could find another parent who needs PT care that has an alternate schedule as you or something. At any rate, that’s frustrating.
Thanks again for your question, and best of luck figuring out a solution.
PT care is pretty rare here also. Home-based daycares are limited to a specific number of children (5 beyond the care provider’s own children in our province). If they take a PT child they’ve tied up one of their spaces and are only collecting a partial fee, so it’s not ideal financially and likely only done if they are having trouble filling the spot full time. I suppose if you could find another parent who wanted the other hours of a normal fulltime day you might make an arrangement to share a spot. At a commercial daycare centre I can see them not having PT rates because they also have to make sure their child:care provider ratios meet the legislated levels and having a lot of kids coming on different days, or different parts of days makes scheduling their staff a major headache. In addition to that, both the commercial and home daycares need to document payments and provide tax receipts for two families, and there’s the discussion time spent with two sets of parents rather than just one (reviewing everything from how the day went, to vacation schedules, to toilet training or major behavioural issues). The child may only be there part of the time, but many of the services have to be provided to two sets of parents instead of one. Think about it, if Joanna did her project work for twice as many customers who only needed her for half as many hours, it would still double her record keeping/billing/tax records, not to mention project meetings and interim deliverables. It’s far more cost effective to have one child and one set of parents to make that fee than the same fee but double everything else.
A decade ago when our youngest went to a home daycare we paid $200/wk and you were required to pay for all 52 weeks of the year, including when she took her vacation or when you didn’t need her because you were on vacation (ideally you take the same weeks!). That worked out to $11,700 per year. With all 5 spaces filled she made $58,500 before taxes. She was also allowed tax right-offs for the daycare. Food and toys of course, but also a percentage of her mortgage, utilities, the cleaning lady etc. If the daycare uses 30% of the rooms (or maybe it’s square footage) then she can right off 30% of those expenses as business costs. If you have the personality to deal with 5 infants/preschoolers day after day it’s a good career option.
Can you expand upon your food budget? It seems so low! I would love to read more about what you buy and make.
Hey Sarah, I’ll definitely explain more about our food budget! Since I want to give you a proper response, I think I’ll just to a whole post about in in the next week or so. For now, here’s a little bit about what we do:
– I buy all our groceries at Walmart and Costco.
– I plan out two weeks’ worth of meals and do a big grocery haul every two weeks. Aside from that, I only head to the grocery for perishables such as lettuce, fruit, veggies.
– We eat out at a sit-down restaurant maybe once a month (at most). Other than that, we make meals from home, as well as eat one takeout meal a week.
– We eat pretty simple meals, both because they’re cheaper, but also because I don’t have time to make fancy dinners except for special occasions.
I’ll include better details and some of our routine meals when I do the post. Thanks for the great question!
My budget is from the 15th to the 15th to coincide with pay periods. Last month I was $16 over budget (there were a few split house expenses I didn’t know we’d incurred because we still keep separate accounts).
This month I took a trip to Montreal where I over-spent on eating out so I only have $77 left until 4/15 and I know cat food will take $60 of that and food shopping and a train ticket will put me over-budget yet again. After eating two meals per day out for a week on vaca, I’m going to tighten my belt for the next 10 days and hope for the best. I knew this was a conservative budget when I created it so if I’m $20-30 over, I will consider it a victory!
Totally a victory. If it’s making you stretch until the end of the month, then you’re doing it right and a little over won’t ruin ya. I like the 15th to 15th idea. Aside from the pay period benefit, it’s always the end of the month when our big expenses roll around (rent, cable, cell phone), so it’d be nice to have those fall in the middle of the month instead.