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
|Rent: $1300Utilities: $508
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?
I budget a bit differently to most people. I simply add in all my expected expenses and consider half of the rest as savings and the other half as investment income.
So far it works pretty well because both our savings and our investments are significantly bigger than they were when we started.
That’s a great idea! We are still figuring out how to invest our savings, but that seems like a good breakdown!
Nicely done.. The “everything else” is a grab bag of sorts, but I can see how that would work well for you… We used to budget out EVERYTHING, but what can you really do if your gas budget is high one month? You still need to drive to get to work. Now we do something similar to you guys.
Your food budget is crazy low… $250 on groceries? You have kids, right?.. How do you keep it so low?
We don’t have any kids… yet. Our first is due on Saturday, and she won’t be contributing to our food budget for a while 🙂
Sometimes I spend closer to $300 on groceries per month, and on those months I just take it out of our Restaurants/Fast Food category, so it evens itself out in the end.
Our food spending is higher, and we pull gas out into its own separate category since it’s typically about $450/month. We’ve also got some lumpy expenses due to our real estate investments (bills that come once or twice a year), but it’s not a huge deal.
Other than that, our expenses are similar to yours – though I am jealous of your $40 water bill!
This is our first place we’ve actually had to pay for water, so it’s good to know it’s not super high… I know growing up it was one my parents’ most expensive utilities!
I like your budget. In many ways it’s similar to mine. I record my details (budgets vs actuals) month after month, year to year in order to plan for trends and expected increases. Looking at your info I assume that you don’t carry any ongoing credit card debt and hopefully usually pay off the full balance whenever possible thus controlling interest charges. Another thing to remember is, besides paying off debt, one should try to ensure that savings dollars (which yours is admirably quite high) is working as hard as possible in earning as much interest as possible. Here of course it’s a balance between accepting some risk vs expected income.
My budget differs somewhat from yours in that we own a house, rather than renting. This incurs it’s own set of expenses. Long ago I decided to make arrangements to switch from yearly fees over to monthly fees as regarding home insurance fees. I incurred a bit more interest payment (by paying monthly) but I found that this way it was easier to budget better with stable fixed monthly numbers. In fact now the only annual expenses that I plan ahead for (with fixed regular monthly pre-savings) are for annual family vacation expenses and December Christmas gift/entertainment expenses.
This year we really hope to do a better job of having our savings work for us! And I really like the idea of doing monthly pre-saving for vacation and Christmas. I think we’ll incorporate that in February!
Your budget looks great and I love how much you’re saving. We have a budget, but don’t necessarily follow it.
We’ve totally been there with having a budget but not following it 🙂
The most important thing is to just make sure you’re saving… which, with that extra side income you make each month, I bet you are!
I noticed you don’t have “renter’s insurance” listed. Do you not have it? If you don’t you should probably get some. It is pretty inexpensive and hopifully you never need it. The piece of mind knowing you stuff can be replaced is worth the price (also it usually covers accidents in the house were some a-hole to file a lawsuit against you).
Have you considered starting a small vacation fund? It seems you have the space in your budget to do it and knowing you can take some time off is a great feeling. Other than that you budget looks great!
We don’t have renter’s insurance. We’ve actually never had enough stuff to justify getting it… YET. We are slowly adding nice things to this home now that we have a little more room (our last place was 450 sq ft). So I think it’s something we’ll consider in the near future.
Also, yes, on the vacation fund! That is a must!!
Thanks for the tips!
Just found your blog.. I love it! GET THE RENTERS INSURANCE. Think of it as cheap defense in the event of an accident. Someone falls down, sues you.. You guys pay for the attorney. You would have defense costs covered with renters insurance.
And that’s a great point. It’s a cheap enough insurance that there’s really no excuse for not getting it. I think me and the Mr. are gonna have to have a talk!
I like the idea of having an everything else category and making it work based on your needs. Good luck with your resolutions!
The “Everything Else” category has been my favorite change to our budget for sure!
I like the idea of doing an “Everything else” budget. I’m going to try this!
It’s worked really well for us. I think you’ll like it!
Hey, it’s my first time here, I found you via L Bee’s tweet! Good luck finding a forest where money grows on trees. Although I should tell you I’ve been to both Ghana and Cambodia and it isn’t in either of those countries 🙁 Our food expenses are higher then yours but that could be because we’re a family of 5, or because we live in Canada and food costs more up here. I posted our expenses if you’re interested. http://moneymastermom.com/family-expenses-for-december-2012/
Well, crud. I guess we’ll cross Ghana and Cambodia off the list 😉
Your expenses are seriously impressive! That cell phone bill makes me swoon. We haven’t started having diapers yet, but that expense may warrant a category all its own when our baby girl arrives!
Your budget is very similar to mine. We are pretty close with the numbers as well. I also have an everything else budget because I have no idea what I am going to purchase, but it would fit under that category!
Since budgets aren’t a typical topic of conversation, you never know how yours lines up with others’. Good to know we’ve got a budget-conscious person who’s similar to us!
I have my own “everything else” category. It’s also combined with my “fun money.” I need to make some tweaks for this year, and try to lower what I can for expenses (although it’s getting hard to find places to cut). One area I’m still baffled with how much money I spend is groceries. You’d think I weighed 300 pounds with the amount I spend just for myself! I guess I need to eat more cereal and pb&j.
I don’t advocate replacing cereal and PB&J for dinner! 🙂
I think healthier food tends to be more expensive, unfortunately. We’re gonna try to be healthier in general this year, so our food budget might end up needing some tweaking.
Looks like a solid budget. It’s gotta be nice not having student loan payments 😉 #OneDay
Thanks! And it is nice not having student loans anymore… But you can still have an awesome budget with them if you put money in savings each month, which I know you do! 🙂
Looks like a solid budget! We budget monthly and are fairly close to where you’re at in terms of expenses. We break out our everything else budget but allow it to roll as well so we can have overages. That savings amount is AWESOME!
And I LOVE the idea of having “Everything Else” roll over! I’ll definitely be bringing that idea up to Johnny! 🙂
Good job! Our budget is similar…..we try to include everything so that we can actually stay on budget. Luckily it works most of the time!
Yes, “most of the time” is key! I thought about making a resolution to keep a perfect budget for the whole year of 2013, but that would probably be a tad too lofty! For now I’ll just focus on January. 🙂
I don’t follow a budget because my life changes all the time. At the moment I own my place so have $0 rent but spent about $10K on it over the past two months. I try to budget for the year though, and give myself about $1000 per month for living expenses.
$0 in rent is awesome. It’s a dream I hope becomes a reality for us someday! First it will take us buying a house and then paying off the mortgage.
And there’s something to be said for a life that changes all the time… I’m sure you never have a dull moment!
I haven’t made a budget it a while. I’ve been sort of “winging it”. I guess I should get back on the horse as you mentioned and dust off my Excel spreadsheet. Maybe I’ll try Google Docs instead? Who knows…the possibilities are endless. I try so hard not to make a miscellaneous box because I tend to abuse that. I don’t know why but my brain thinks that miscellaneous can be anything…yes even an overpriced jump drive that I don’t need. Though, everybody needs a 32GB jump drive.
It’s only day two of the new year, so it’s not too late to start January off with a budget!
And I’m sure my husband would agree with you that a 32GB jump drive is a “need.” 😉
Definitely a very well thought out and detailed budget. It seems like it’s working for you guys. Are you guys debt free? From what it looks like you don’t have any payments on loans. Additionally are you guys investing outside of a 401k or IRA?
My wife and I maintain a monthly financial statement. We are primarily focused on our monthly cash flow.
We’ve been debt free for just about a year now. Last year we focused on building our savings. Our focus for this year is investing our savings. We were just talking about the possibilities this morning, but we’re still not sure what exactly we’re going to do!
This is the first time in a while that we’ve lived somewhere bigger than 500 square feet, so our utility bills are the highest we’ve ever paid… but I’m sure they’ll just get higher as we continue to upsize! JOY.
And we’ve loved the “everything else” category… Johnny can attest that I’m a much happier camper… err, budgeter… with it!
LoL! Wow, not sure how I didn’t find your site earlier, I love the name of it. Your first budget reminds me of my wife and I, we definitley had quite a “fun” experience trying to write it all out. Our first year, we were cash-only, and when our food envelope ran out of money, we were PB&J and Ramen as well! Ahh, the good ol’ days.
Nice work on 35% savings, that’s incredible. My question is, are you saving for something, or is there a reason you’re not putting more into pre-tax savings to maximize the tax savings long-term?
Again, love the site. I will frequent 🙂
Some of that savings will be going into a Roth IRA starting very soon. We are also saving up for a hefty down payment on a house in the next couple years. We’re hoping 2013 will be the year we make our savings work for us a bit more!
Hi there! I love that you’ve shared your budget with us. So often I see people talking about budgets with made up numbers and hypotheticals. It is nice to see how real people live and how very similar your budget is to my boyfriend and I’s. I like the “Everything Else” category but we are still in the tracking phase of our budget so I would probably get hives if I just lumped everything together. But it’s all about what works for you! Love your site!
When we posted our budget, we had no idea how it would line up with other people’s! It’s been awesome reading your comment and a couple others and hearing that our budgets are similar.
And I don’t want to be responsible for anyone breaking out in hives, so PLEASE don’t incorporate an “Everything Else” category!! 😉
Our budget breaks down as follows:
Eating out $100
Gas/Fuel $250 (but usually we don’t use it all)
Household Goods $50
Total Everyday Expense: $1250
Cell Phones $150
Electricity Avg. $85
Car Insurance $90
Life Insurance $105
Gym Membership $20
Personal: $100 ($50/each)
Monthly Bills: $1328
Total Monthly: $2578
Ours seems to line up pretty closely to you guys! We do pay a little less in rent, we give ourselves a little more play money, and instead of one lump ‘Everything Else’, we’ve budgeted for some of those things in your category like medical bills and gas!
You’re definitely lucky to have no more student loans! The following is where we differ:
Pre-Tax Retirement: 5% – taking advantage of 401K match, but trying to pay off debts first!
Savings: 10% – this includes pre-savings for Christmas, travel/vacation, car maintenance, and renter’s insurance
Student Loans: 25% – this is the biggest bummer of all. 🙁 🙁 🙁
Check that out, man! We’re like budget twins. I’m actually really surprised how close we are on almost everything. And I think you’re right on about taking the 401k match, even while paying off debt.
We feel super fortunate to be done with student loans, but you guys are doing an awesome job at tackling it. 25%!!! That’s great. So once you’re done with student loans, you can move that 25% right over to savings (or retirement/investments) and then we’ll pretty much be identical budget twins.
Budget looks great – especially the amount you’re putting towards savings. Question though – is the reason that you’re only contributing 8% to pre-tax savings because you are already maxed out on the allowable contributions? If not, I’d recommend reallocating some of the 35% of taxable savings until you’re caught up!
We haven’t maxed out our pre-tax contributions. Since we’re only a year out of debt, we spent most of the year putting our savings toward an emergency fund (8 months). We’ve also been reluctant to move our savings to retirement because we’re hoping to save for a mortgage. But in 2013, we’re looking at upping our pre-tax and starting a Roth IRA. Before this year, it’s all been unchartered waters for us.
This budget looks great, and pretty similar to mine, actually…maybe that’s why I think it’s great?
Also, I have to tell you that I have really been loving your blog! You and Johnny are my favorite Internet couple. Kim and Kanye have nothing on you two 🙂
Thanks! Great minds think alike, am I right?!
And I’m sure Kim and Kanye saw we were having a baby and decided to copy us 😉
I like your budget structure! Given that most of your miscellaneous expenses are covered in the Everything Else category, how did you guys manage to settle on $50 for yourselves and do you manage to keep within that amount?
The $50 in personal spending for Johnny and me is for unexpected wants, like a book that I just HAVE to get. Some months we use it, and some months we don’t. It rolls over if we don’t use it. Other personal items, the want-needs (like new wardrobe items that we actually need) usually go into “Everything Else.” So doing it that way, we do keep within our budgeted amounts. If we only had the $50 personal for both our personal wants and needs, it wouldn’t be nearly enough!
Joanna, That’s amazing that your Grocery bill is only b/t $250 and $300. We spend $400 a month on this and that’s after cutting back a bit. Any tips in this area?
Thanks! I pretty much only shop at Walmart and Costco, and I plan out our meals two weeks in advance, so I only have two big shopping trips a month. Sometimes I do go over on our grocery budget, but I offset it by spending less in our Eating Out category.
I had this “perfect budget” all worked out for 2013 and I just completely disassembled it to do the “everything else” method. Anxiety gone :).
I did break out a separate line item for “Gas & Parking” and combined “Food & Alcohol” from all sources. But everything else that isn’t a fixed expense is “Everything Else” :).
Isn’t that a great feeling! We felt the same way when we switched over. It’s still really important to look at that total month-to-month and make sure that your line items add up within that Everything Else category. But it really does free up a lot of unnecessary anxiety.
Let us know how it works out for you this month.
so I’m a bit late to the game here but just recently discovered your blog and have been reading back a bit. Interesting to see your take on your budget! Particularly with your latest addition. We just welcomed our first child (also a baby girl) a few months ago. Our budget break-down should look something like the following for the year, depending on how long and how much I continue to work:
Rent & Utilities (including cable/internet): $1000
Insurance (car & rental) $200
Groceries (including personal care products, cleaning items & vitamins): $300
Eating Out: $100
Cell Phone: $150
Household (clothes, baby expenses, larger household expenses, sport & equipment fees, etc.): $500
Savings (personal, roth, college fund, etc.): 60%, charity: 10%, 401k: 7-8% + match + a couple grand a year into an FSA to cover all medical expenses.
It will be the first budget with no payments for us! We started this journey with six figures of student debt (four degrees between the two of us at way too expensive private university) and seeing the status: Paid in Full has got to be the most exhilarating part of the process!
Thanks for the comment, and congrats on your new addition a few months ago!
Your budget is rocking! 60% for savings?!!! That’s incredible! Whatever you’re doing, it sounds like you’re doing it right. Congrats on being debt free and paying yourself now instead of all those stupid loan bills. And “paid in full” have got to be the most beautiful word combination in the English language.
[…] with a blog name like Our Freaking Budget, we’ve got a budget. In fact, here’s what a sample monthly budget looks like in our house. But in addition to our overall budget, Johnny and I have limits in our […]
[…] 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 […]