How I Do: My Monthly Budgets

(Find Part II here!)

I usually try to keep things PG-ish here, but today... I'm going there. Talking about something dirty. Filthy. Downright terrifying to many, even. I'm talking about the B-word.

Budgeting.

That's right. So toughen up, buttercups, because it ain't pretty, but it's important. We're gonna learn how to get a grip on our dolla dolla bills y'all right here, right now.

BUT FIRST! Let me take a selfie. Read this: How I Do: Dollars & Sense.

The Clif's Notes version of that intro to dollas goes something like this:
  1. SAVE MONEY. Yes, you can. No matter how much you make or how high your rent is. YOU HAVE TO SAVE SOMETHING. And I swear, you can.
  2. MAKE A BUDGET. There are different kinds and different ways to do it. I'm going to show you mine, but there's a whole personal finance blogosphere out there that can teach you about other methods.
  3. MAKE A SYSTEM. Whatever works for you, use it. It may be totally different from mine, and that's okay. Just come up with a system you can use and use it.
  4. KNOW YOUR STUFF. Research. Read. Don't be dumb about money. Think critically about your future. YOU CANNOT START SAVING FOR RETIREMENT IN YOUR 40s. I'm sorry for yelling. YOU CAN'T. Also, debt is not "normal." Travel, toys, a wedding = all horrible reasons to rack up debt. Don't do it. Save and budget so you can afford it. Don't fall for the crap people tell you about this being the best time in your life to go for it, no matter the cost. NO. This is the best time in your life to create a solid financial-and-otherwise future for yourself and loved ones. Live within your means
(Sorry for getting riled up on that last one. That kinda thing really grinds my gears.)

Anyway. So I've been hearing and seeing a lot of talk about budgeting lately, some of which I agree with, some of which I make note of and promise to use myself, and some of which I could not disagree with more and want to banish from the Internet. Now, I'm not saying my way is right, but it is undoubtedly right for my situation. So I'm just thinkin', if you find yourself in one similar to mine, this might be for you.

'Budget' is not a dirty word. Budgeting is not a bad thing. It's not meant to be restrictive or to ruin your life. It will, in fact, when done right, make your life less stressful, more financially independent, and more deliberate. Budgeting helps.

So without further ado, here's How I Do: My Monthly Budgets
(Buckle up, this might be a long one.)

Step 1: Calculate guaranteed monthly income. This generally stays the same, as I only take into account income from my full-time job. I do make some side income through freelance projects, but since timelines for billing and payment are more fluid, I generally treat this as "extra income" for the month.

Step 2: Estimate extra income and designate a location. I like to make a low-ball estimate of extra income I'll make for the coming month and decide, before I even receive it, where it'll go. Depending on the amount and the way my month looks, it'll go into one of the following categories:
  • Long-term savings
  • Retirement fund (I am 100% responsible for my own, as I have no retirement account through my company.)
  • Emergency fund (I had kept mine fully funded at $1,000, but I recently decided I wanted to increase it a bit more and am working on funneling more cash into there.)
  • Credit cards (I don't carry balances and I generally only use two cards — AmEx for travel rewards and Target because duh — on a monthly basis. I don't charge what I can't afford to pay off, but sometimes having more cash to throw on the card frees up more of my paycheck for something else.)
  • Cash (I almost never have cash on me which is rarely a problem, but sometimes it is. If I know a certain cash-only/preferred event is coming up or something like that, I'll tuck a few bills away to keep for cash emergencies.)
Determining where this money goes before I get it helps prevent me from feeling like it's a windfall of some sort and spending recklessly.

Step 3: Start with what I know. I like numbers to stay as static as possible — I hate trying to budget around fluctuating numbers, and I don't like money-related surprises. Because of that, I have a rather strange system for my utilities.

I have a separate checking account, called my Utility Fund, that earns a very small amount of interest. I have this account linked to my cable and electric companies (gas heat and hot water are included in my rent) and I pay those bills right out of that checking account. Each month I transfer the same amount of money into that account, no matter what, generally even before I've received the bill. This tends to leave me a surplus often enough to balance out the months with higher than expected bills, and I can budget easily knowing what's coming out of my paycheck each month.

My static expenses each month are:
  • Rent (including parking, heat, hot water)
  • Car insurance (my car is paid off, so no payments on that for now)
  • Cell phone
  • Netflix
  • Internet (Utility fund)
  • Electricity (Utility fund)
These are due on the same day every month and in the same amount, no questions asked.

Step 4: Save. For the sake of this section, I'm going to use some fake numbers. Let's say for example I bring in $2,000 every month and, up to this point, $1,000 is already "spent" or at least accounted for in my static expenses. Now I have $1,000 left that has to get me fed and clothed, put gas in my car, let me have a little fun, and be put away in savings. My base, no-questions-asked, not-up-for-debate savings rule is 10% of my salary. So in this case, $200 will go into savings at the minimum. I tend to break it down like this:
  • 25% into retirement
  • 25% into emergency
  • 50% into general savings. My general savings is kind of everything (long-term stuff and cushion) + whatever I'm working on right now: an upcoming trip, a new bed (soon, I hope!), a new car (even sooner). I may end up breaking them off into separate funds one day, but for now I keep track of how much I'm saving for what in that account with a simple spreadsheet.
Step 5: Make some decisions. Now, I have $800 left for monthly spending. Here are my budget categories:
  • Clothes/Shoes — Accessories included here; running/yoga clothing not included
  • Dining Out — This mostly means just "lazy food," takeout dinners or lunches when I don't feel like grocery shopping or cooking. Meals with friends generally go into the next category
  • Entertainment — Bars, tickets, cover charges, meals, booze for BYOB events, etc.
  • Gas — For the ol' vehicle
  • General Expense — A sort of catch-all; here I put the charge for Spotify (yes, I pay), the random takeout coffee, parking fees (very rare), and other purchases that don't fit elsewhere
  • Grocery — Girl's gotta eat
  • Beauty — Makeup, hair care, skin care, nail polish
  • Health — Vitamins, mostly, but I'll add in things like band-aids, OTC drugs, etc.
  • Homeware — EVERYTHING for home. Some people count paper towels, etc. in grocery, but I put it (along with tissues, toilet paper, cleaning products, etc.) here. Candles, new decor, etc. all go here
  • Car Maintenance — Oil changes or scheduled maintenance like brake jobs, new tires, etc.
  • EZ-Pass — I have to use my EZ-Pass to get to my mom's, my older brother's, my best friend's house, NYC and a lot of other places I go so I give this a good fill-up every other month or so, and monthly in the summer when shore trips increase
  • Gifts — Birthdays, holidays, new babies, weddings, all that fun stuff
  • Donations — I made a deal with myself that I would "give back" in some way every month. Sometimes it's volunteering time, sometimes it's a physical donation, and other times it's a financial one to a charity I support
  • Medical — Pretty much the chiropractor category. Also included here are doctor visit and prescription copays
  • Blog — Sendin' y'all my dolla dolla bills
  • Running — Race entry fees and running gear
  • Other/N.C. — Other stuff and, swear to god, I can't really remember what I initially made N.C. stand for. Oops. This is generally if there's a big one-off expense for the month, or a trip that I budget differently. (For example, on a weekend trip to Cape Cod, I just put everything I spent in this category, rather than itemizing out the takeout coffees or lunches or whatever else. It's way easier to budget this way.)
These amounts change every month, pretty much. I look ahead at what I need to buy (oh yes, I have a system for that too) and what trips, events, parties and the like are coming up. I generally begin filling in my budget categories at the beginning of the previous month and have it all firmed up by the last day before the month starts. Once the 1st rolls around, that budget is set in stone.

In our fake number example, I would take the remaining $800 and break it down so each of those categories has an appropriate number. In real life, I do this too with whatever my balance after basic savings is. When there is extra cash that I don't need in the above categories, into savings it goes. In this practice of zero-based budgeting, every single dollar I make every month has a designated place to go before it goes there. Impulse spending is (mostly) a thing of the past, as are buyer's remorse and the month-end panic where I'm days away from payday with not a dime left to spend for gas or groceries.

If you want me to share how I designate monthly amounts to each of the categories in Step 5, leave me a comment or say so in an email! This post is long enough already without me adding that part in here, but I'm more than happy to share my system if you guys are interested! Just let me know and I'll let you know how I plan ahead for monthly spending and keep track of my various "To Spend On" lists. It involves a lot of careful planning and a couple of lists (who's shocked?), but I rarely feel restricted and it helps me to meet my goals of deliberate, purposeful spending and living by my brand of "minimalism"*.

*Also another post for another day, if you're interested!

So there you have my budgeting basics. Remember, my way is what works for me, and it may not work for you. BUT doing your research is crucial in all matters of money. You can start here, and let me recommend some personal finance (PF) blogs I love that are brimming with great, useful information:
Do you keep a budget? Have any tips of your own to share? Do you think you'll look at creating your own monthly budget now in the near future?

Happy budgeting, happy spending!

Comments

  1. We do our budget in a pretty similar fashion. It's hard to get stared but once you do, it get so much easier.
    I do like that you have an acct for your bills that get auto drafted. We use online bill pay from our main acct but we may switch it up a bit.

    Thanks!!!

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  2. This is so great - bookmarking it now! I've always just kind of had my budget floating around in my head but have been wanting to put something down on paper for awhile now...thanks for the tips!

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  3. i'm a saver at heart. the majority of my moola is tied up in investments/retirement and high interest savings. i only leave a small amount of accessible cash in the checking account for house stuff and some misc expenses. i never EVER have a balance on my cards because credit card interest is dumb and annoying and over the top that it gives me rage. debt drives me insane so the only debt i have is my mortgage which will be paid off in the next 5yrs.

    learning how to budget is SO IMPORTANT; a skill that everyone should have from early on. my sister didn't have that and she was a financial mess in her 20s.

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  4. I love reading posts about budgets! They are so insightful and help me to think more consciously on how I spend my money.

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  5. These are my favorite posts to read - they just motivate me to budget and stay the course!!! Great job girl!!!

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  6. I don't know if I love this post because I love budgeting, or because I love knowing there are other nerds out there who also love budgeting. Either way, great tips, lady! This is almost identical to how I do my budget, only instead of categories for spending, I've recently switched to estimating expenses for every single day of the month well before that month happens. It's the same concept I guess, but it helps me to see all my projected expenses on more of a timeline than as a lump category.
    Also, could not agree with you more about debt not being "normal." I have a car loan and a mortgage (I wish I didn't, but that's another story for another day), but CC debt scares me. I use credit cards (because points = free money!) but always pay them in full and never carry a balance. Of all the life lessons my parents taught me, I think this is the most important one.

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  7. Great info! I really *want* to make a budget but unfortunately that means I have to come to an agreement with my husband on how to spend money. :)

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  8. To be honest, it's so daunting. I am good with bills and the like, but it's the other stuff that gets me. Grocery, eating out, gifts etc. Also, I'm embarrassed to admit I am horrible with credit cards. My goal is to have one paid off by the end of the year. I know I know, please don't hate me, I hate myself enough for it, especially considering I've already been there and done that in Australia (stupid stupid) and here I am again doing the same thing. Shopaholic is a real thing, sigh. I am going to start trying to make a budget.

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  9. Oh yeah, I'm a total budget stalker :) Share how you pick your monthly amounts, please! (I post about finances too, but haven't in awhile. If you ever want to guest post about it, you're absolutely welcome any time.)

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  10. This is actually so helpful! I always have a rough budget but I've been trying to get more organized like this so I can track exactly where all the spending happens. Thanks so much for sharing!

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  11. I've budgeted before and it's worked so well! I was able to save a LOT. Unfortunately, then I moved out and budgeting didn't happen because I just wanted to have fun and that wasn't smart. This post was great and REALLY helpful!!

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  12. This is how I do my budget too, except I have a few less categories. Great tips! And yes, what Stephanie said- I'd love to see how you break it down! That's where I always have a harder time.

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  13. So much great information in this post- I'm going to check out some of the other blogs, and your other post too!

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