Todd and I are frugal people. Some of our closest family members think the word “cheap” is more appropriate. That is untrue. We know how to spend money. We are simply control freaks, so we are very choosy about where our cash goes. We track our expenditures. We attempt to pay rock-bottom prices on just about everything. And, we set a budget.
In the early years of our marriage, “budget” was not in our vocabularies. We had no children and my job provided us with a rent-free apartment, all utilities paid. We pretty much spent freely on whatever we wanted. We bought and sold several cars. We traveled. We ate out. A lot. And we accumulated a ridiculous amount of unnecessary stuff. It was a ridiculous mistake that we still regret.
But then, we had a wake-up call. 2006 and 2007 happened. Todd finished graduate school and went to work full-time in his professional career. I left my professional job to stay home with the kids and finish my own graduate degree. We bought a house. Todd’s unexpected epilepsy diagnosis left us with expensive medical bills. We bought a minivan. And we started dipping extensively into our emergency savings just to buy groceries. It got ugly. Real fast. Most of it was our own fault.
For about six months, we sat around feeling sorry for ourselves. Then we pulled out the budget we were required to create as part of our first time home buyers’ class. It was not very thorough. It got reworked a little and then put back in the file cabinet. Where we promptly forgot about it and continued feeling sorry for ourselves.
About a year later, Todd took a class from Crown Financial Ministries. The concepts taught are very similar to Dave Ramsey’s Financial Peace University. Following Todd’s experience with Crown, we sat down and made our first honest-to-goodness budget. It was a long process consumed by calculations, conversations, and hard choices. But it was worth it. We have some kids following in our footsteps, and we need to do this right.
This week we took the 2016 budget, noticed where we over- or under-estimated our projections, and made necessary adjustments. In all, it took about forty-five minutes. Todd spent another hour or two updating and organizing the spreadsheet where we track our expenditures.
This year, the $400 monthly budget I use for grocery and household expenses will stay the same. Other categories required some tweaking, but for the most part we were almost dead-on with our 2016 projections. Curious about the categories we use and any spending adjustments planned for 2017? Here is the general breakdown:
- Entertainment/Recreation: Includes Netflix, camper expenditures, and eating out. We also track our savings for family trips and vacations in this category. $10/mo. increase to accommodate monthly date time.
- Transportation: Includes fuel, insurance, money set aside for maintenance, and savings for future car purchases. Essentially unchanged.
- Insurance: Includes life insurance. Unchanged.
- Medical: Includes premiums for medical, dental, and vision insurance. Also our HSA savings and out-of-pocket costs. Additionally, we are saving for anticipated orthodontia on two kids this year. Unchanged.
- Clothing: Everything except for dance apparel & shoes. $10/mo. increase.
- Activities: Dance, 4H, summer camps, violin rental, etc. Unchanged.
- Housing: Mortgage, escrow, and all utilities. $90/mo. increase because our property tax cut was offset by an obscene spike in our home’s appraised value. The government likes to play games like that.
- Home Maintenance: Repairs and general projects. Unchanged.
- Tithe & Charity: This one is self-explanatory. Unchanged.
- Taxes: Payroll only. Sales tax gets lumped in with purchases and property tax goes in escrow. Unchanged.
- Investments: Retirement and college savings. Unchanged.
- School: Curriculum, supplies, and membership fees. $100/mo. increase because I really blew the budget last year.
- Pets: Food, supplies, veterinary care, etc. Unchanged.
- Household: The $400 budget. Unchanged.
- Gifts: Christmas, birthdays, and randomness. Unchanged.
We are not reducing budgeted amounts significantly in any categories, so where does the money come from to increase the categories listed above? Last year we budgeted a surplus. We will eat into that surplus this year to build a slightly more comfortable budget in 2017.
As the year progresses, we will adjust if necessary. The biggest challenge, quite honestly, is keeping up with the tracking spreadsheet. Entering every single expenditure. It is my own little first world problem.
Last year, we were poor at spreadsheet thoroughness. This year, we are committed to being better. If we follow through, then we will know where the money goes. And we can freely spend on whatever we want. As long as it can be tracked in the budget.
Does your family keep a budget? Let me know in an email or comment below!