Budgeting. Dang it.
Following the popular “re-evaluate your life” thing that everyone does at the new year, I have decided to develop a budget.
I’ve never really had a budget before. My general method of dealing with our money has been Pay the Bills, Don’t Spend Too Much at the Grocery Store, and Put All Extra Money Toward Debt & Maybe a Little In Savings. But I’ve never planned out where EVERY dollar should go. Frankly, it seemed kind of pointless. I mean, aren’t all budgets pretty much about spending as little as possible while saving as much as possible? Plus also I’m not trying to enter every dollar I spend into an excel spreadsheet. I’m busy. Those Tivo’d Real Housewives episodes aren’t just going to watch themselves, you know.
We are now at a new point in our life. At this exact moment, we have only three bills. Of course, we’re also technically homeless, so there’s that. We are going to be making a lot of decisions in a few weeks, and are going to have a ton of control over future expenditures. The Adventure was stupid expensive, so Priority Number One is getting the credit cards paid off and the savings built up so in a year or so when we figure out exactly where we want to live and find the energy to house-hunt, we’ll be ready to go.
I was talking about this with my friend Tressa, and she told me about this concept where instead of randomly assigning dollar amounts to the categories in your budget, you assign percentages. And then I was like, okay, where do you get the percentages from? Because I am five years old, apparently. Turns out, if you google “budgeting with percentages” you’ll get plenty of results to choose from.
Since we have a slightly different lifestyle than other people (we homeschool and my husband works from home), we don’t need much money for things like gasoline and school clothes, and we need more for groceries and toilet paper.
Here is what I’ve come up with, to start:
Housing – 33%
Utilities – 9%
Insurance – 2%
Debt – 10%
Long-Term Savings – 5%
Short-Term Savings – 5%
Groceries – 24%
Household – 2%
Entertainment/Recreation – 10%
Housing seems high to me, but that’s how much a house costs. Because of our weirdo lifestyle (see above), we need a lot of things from a house – an office for Jim, a place for school (a dining room table is fine, I just need to have a dedicated surface that won’t get splattered with milk or spaghetti sauce), and a kitchen decent enough for me to prepare three meals a day in. Long Term Savings is where we’ll work toward a reserve of living expenses, and Short Term Savings is where I will stick money for clothes, the life insurance bill, homeschooling supplies, car maintenance, and small unforeseen expenses like new tires or whatever.
The grocery budget is HIGH, I know. But have you SEEN how much cheese costs these days? And even at 24%, the actual dollar amount is going to pinch. I’ve been consistently working toward feeding everyone the best food I can, and I would rather do without other things than go backwards in that department.
Household is a category because HAI, I don’t own any towels. Entertainment is high because that’s where I will budget for the kids’ activities – swimming lessons, gymnastics lessons, piano lessons, etc. It will also cover Starbucks and haircuts and those miscellaneous things we spend cash on throughout the week. Theoretically it would also cover yarn, but I doubt there will be any money left over.
I have a lot of feelings about this budget. On one hand I feel like a dumbass for not doing this sooner. On the other hand, I feel a little sad that I won’t be able to make impulse yarn purchases or Amazon orders. But mostly I feel empowered.
In just the last few weeks since I’ve been thinking about this, my perspective has changed. That annoying 2% Social Security tax hike in our first paycheck really illustrated how much a whole percent IS. It’s a pretty small chunk of money, and we only get 100 of them to spend every month. Realizing that it only takes a couple of little impulse purchases to gobble up an entire percent of our income has opened my eyes to all the places we can cut back. It’s not the big expenses that have been our undoing, it’s all the little ones adding up.
I’m sure I will have to adjust things here and there, and it’s a huge incentive for trying to find a less expensive house, but I’m optimistic that with this plan Mr. Visa and Mr. Other Visa will eventually disappear and I can go back to buying yarn and using paper plates.
How about you guys? Do you budget? Have you always budgeted? Have you accomplished great things with a budget? Did you look at my budget and think something like “wow, she totally forgot about *insert giant line item*” ??