by Hope
Without further ado…my Q1 budget.
| Line Item | Yearly Amount | Monthly Amount |
|---|---|---|
| Household Expenses | ||
| Rent | $7,800.00 | $650.00 |
| Auto - Gas | $2,340.00 | $195.00 |
| Auto/Renters Insurance | $6,000.00 | $500.00 |
| Groceries | $5,200.00 | $433.33 |
| Netflix | $180.00 | $15.00 |
| Spotify | $180.00 | $15.00 |
| Amazon | $144.00 | $12.00 |
| Personal | $5,200.00 | $433.33 |
| Utilities | $3,600.00 | $300.00 |
| House/Yard Maintenance | $1,200.00 | $100.00 |
| Allowance | $1,560.00 | $130.00 |
| Household Savings | ||
| Auto - Maintenance | $900.00 | $75.00 |
| Life Insurance | $268.00 | $22.33 |
| EF Savings | $5,000.00 | $416.67 |
| Gifts - birthdays, misc | $600.00 | $50.00 |
| Christmas | $1,000.00 | $83.33 |
| Travel | $600.00 | $50.00 |
| Family Vacation | $5,000.00 | $416.67 |
| Princess Senior Year | $6,000.00 | $500.00 |
| Prepare for Moving | $3,000.00 | $250.00 |
| Debt Payments | ||
| Car Payment | $6,000.00 | $500.00 |
| Student Loan | $10,000.00 | $833.33 |
| Totals | $71,772.00 | $5,981 |
I think everything is pretty self explanatory, but definitely open to your feedback or questions.
With this budget, I will knock out about 1/3 of my student loans. And I have already explained the “up in the air” nature of the car situation so that will play out and then I’ll make a decision on it as well.
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 5 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
What about retirement savings? Medical expenses?
Medical expenses will come out of Personal, if and when needed. Thankfully, we are all really healthy.
But I have decided to delay retirement savings for the time being as I continue to build my EF and focus on debt.
Does Princess have health insurance through school since she plays volleyball for them? All three of my volleyball playing nieces hurt their knees and one required surgery- torn meniscus. I think you’re taking a risk not having health insurance or are you still in something you have through your job? I myself have never been without ever. No, I don’t like paying for it especially since I am never sick. Also, do you have a charity category or did I miss that? Outside of that your budget seems pretty reasonable to me.
I carry health insurance through my business.
I do not have a charity category.
What’s included in the “Personal” category? The other amounts all seem reasonable provided they’re based on your income.
Personal covers a slew of things…from hygiene to cleaning supplies, misc costs for the kids to clothing (notice I have removed the clothing line item.) It essentially gives me $100 per week through the year.
Next week I am using $70 to send Princess skiing with her school. This week I spent $60 to restock our laundry room with laundry detergent, toilet paper, paper towels and such. Last week, I sent Gymnast $20 to buy pizza with his friends one night. Some weeks I don’t touch it.
But this lets me have a little pocket money to do what’s wanted and needed without touching other categories and I chose this amount based on tracking my every day spending from last year.
It essentially allows me to help the kids a little when needed. And let’s me breathe a little easier. I keep it in cash and what’s not spent from week to week goes in my change jars that I have around the house.
My feedback is make a budget for what you actually earn. You don’t make $5,900 a month, and are setting yourself up for failure budgeting money you don’t have.
This budget is in line with my earnings. My business has grown significantly in the last year.
While my monthly income may vary from month to month for sure, the average is more than enough to cover this budget. But thank you for this input.
Hope, you might want to take a look at the budget and financial updates Nicole used to do on The Billfold. She was also a 100% freelance contract worker, but did very accurate updates on what she billed, what had been paid, and how far in advance or behind she was running against her financial projections for the year. You might find that helpful because there’s so much confusion on what you are trying to explain.
I will do that, thank you for the suggestion.
I said “wow” about every second line reading this budget. I’m still stunned at the insurance costs you pay, amongst other things. I really hope that during the year you will give us updates showing how your spending is going compared to your budget. Real figures are where the real learning happens and what I would love to see more of.
i agree with the second part of this comment. Hope you have done a nice job taking the time ot lay all this out.
Don’t lose momentum. Take the end/beginning of the month to then provide a recap of actual versus your budget so that you can see how you are doing and it provides a level of transparency. Also, i don’t know about anyone else, but i have no clue what your debt balances are. Can you include debt updates? How are things moving along? Can you do them on a regular cadence?
I think there’ s just a level of transparency readers crave as it allows them to provide more helpful feedback and suggestions (And also learn from what works and what doesn’t!)
I’m glad to see all these categories – looks like you’ve thought thru a lot of items for the upcoming year. Thanks for putting it all out there!
Den
Good job laying out a budget. I would be a little worried that its so high. It sounds like business is good, but if something changes that will throw you into a world of hurt. Also you don’t show anything for retirement, but I guess that you want to knock out student loans first, which is ok.
That is true, but I do have a good EF and am going to continue adding to it this year. I think my ultimate goal is to get a years worth of EF. I have learned the hard way just how important that is. And as I transition into a kidless home in the next year or so, I will feel much better with a security blanket to cover a year.
What is personal vs. allowance? Why are you saving for moving? Did I miss where you are planning to move? I thought Princess’s school costs included things like her ski trip—but you paid that out of personal. And essentially $1600 for gifts—birthdays and Christmas seems like a lot.
I think much of it is reasonable but it seems like there’s plenty of “fat” in there that you could trim and send toward debt.
Great goal to have a one-year emergency fund! That will give you great peace of mind.
I am still concerned that: 1) your entire family seems to have no medical insurance whatsoever; in a comment response you say payment for that would come out of Personal and that thankfully you are all really healthy. Um, no. Even a simple injury like Princess breaking an ankle while playing volleyball would wipe you out financially in five minutes. What do you do about dentists visits? Well-woman visits (pap smears etc)?
2) your retirement should be at least as important as a family trip, or Christmas gifts. I am sure you could pull money out of this budget to set up an IRA.
Bottom line: Medical coverage and retirement should be right up there after keeping a roof over your head and keeping the lights on. IMHO.
We do have medical insurance, it is covered by my business.
I would like a year’s worth of EF before I start socking away money in places harder to access.
You can always withdraw IRA contributions with no penalty. For a long time I considered mine as a secondary emergency fund.
Did you read the post from one of the other bloggers being expected to support their parents in retirement? I’m afraid that will be you and your kids if you don’t start putting away money now.
IMHO medical coverage and retirement savings are way more important than a family trip and should be right up there after rent and utilities.
Are taxes separate?
Taxes are covered by my business. I have done well in paying my anticipated taxes as I will not owe anything this year and will actually get a small amount back.
As a fellow freelancer, I hope you are socking away about 30% for taxes and that you are preparing to file quarterly taxes. With this income and with fewer children, your tax rate is going to be quite high.
I pay quarterly and have done well is getting close to $0 at yearly tax time. This year I will get a small refund.
This doesn’t make any sense. You don’t actually earn $72,000 a year. And even if you did, a budget is not — “I spend every last penny I earn.” You don’t need Spotify, Netflix AND Amazon, your insurance costs are insanely high and should be easy to get down with some comparison shopping, and with your income, your outstanding debt and the fact that you have extraordinarily little savings for a person your age means that you should not be taking any vacation other than an extremely frugal one.
Hope, you seem like a nice lady but you continue to think and act like a poor person does — with no understanding of the distinction between needs and wants, and very little in the way of delayed gratification.
I’m sorry, exactly how would you know what I earn? I’m a little confused by your statements.
And you are right, you shouldn’t spend everything you earn, and I don’t there are multiple savings categories in this budget. And this does not include my business monies either.
As for needing Spotify and Netflix, no we don’t, but I also don’t feel that $30 per month for a family of 5 to share is not overdoing it.
After doing the math, I decided the Amazon memberships is worth it for the shipping savings alone. With 2 children away from home and my immediate family in Texas and several household items on the Subscribe and Save program, I save much more than this in shipping yearly.
Shipping is free with Amazon, you just need to wait an extra 2-3 days. Is getting deliveries 48 hours sooner worth being in debt longer?
What about things like the cost for a new computer when Princess goes to college in a year? Or her textbooks? Are things like that going to come from the emergency fund? They usually aren’t covered by scholarships (the source of which you’ve gone back and forth on) and are more expensive than the $100/month buffer you’ve allotted for coverage for extra kids needs for all 4 of them.
Princess computer is only 2 years old, I don’t anticipate needing to replace it anytime soon especially since she is not a heavy computer user.
At this point, I will help where I can with college, but will not be going into savings or debt for it. The twins have covered all of their costs independently, and Princess will have an advantage in that she will finish high school with almost 2 years of college complete thanks to Georgia’s dual enrollment offers.
Between grants, scholarships and working, our hope is that she will be able to do the same. We have talked extensively about it and know that sometimes we may have to slow down, but the goal for each child is to get through college with no debt.
For the twins that has meant living at home, Pell Grants, Hope Scholarship and payment plans that they have been able to pay off every semester with their part time work. I anticipate it will be a lot of the same for Princess.
I think starting to save for retirement and college is important, too. How will Princess qualify for any grants with your income now in the 6-figure range?
Hope, I want to commend you for putting a lot of thought into your budget. I don’t think you’ve ever been able to get into this much detail and foresight and use real numbers. So great job getting your arms around everything that should be on your radar. Laying it all out is a huge step. Whether you can meet it or not is another story. But I don’t think it’s right to go digging into your business income at this moment in time.
A few things to ponder (no need to answer):
-Consider removing the “moving” item from your budget. Unless you’re planning to move within a year it’s just extra savings. If you’re working towards a year e-fund anyway I would consider these savings items together. A landlord giving you a month to move with no real notice is an emergency. If you’re thinking you might move after Princess finishes high school then by all means continue to save for the first/last/security expense.
– Utilities – I assume you got this from past bills but I’m confused how you spend this much. I live where there is winter and in the coldest month we still stay under $250. And we have horrible insulation and run electric space heaters. If it’s because you’re home so much are you able to deduct a portion on your business expenses?
– Student Loan – I really think you should reconsider this rapid of a paydown. I would put the extra money towards your car (a tangible asset and a family obligation) or retirement savings that can make you money in the market. You’ve got low rates so you aren’t saving a ton by prepaying. If you have a lean income year, your payments can be adjusted. But you can’t “take out” the extra payments you put in.
Hi Angie,
The moving savings is on there with the anticipation that I will move either the summer Princess graduates or when she heads to college. Don’t know for sure or where to, but it’s definitely a possibility and I want to be financially prepared for it. If I don’t, then I will certainly dump this money into the EF or retirement or debt or something. But I would rather be safe than sorry.
The utilities include our gas, water, sewage, electric and trash pick up. We have horrific insulation, windows with cracks in them and outside doors that you can literally see the outside. The programmable thermostat helps, I keep the temp set to 62 during the day (in winter) when I’m the only one around. But have it set to 68 from 5am-7am and 4pm-9pm. I don’t know any other things I can do to cut it down.
Once their is a finality to what is going to happen with the car (some time this summer or fall,) I may change plans. But with the idea of selling it on the table, I would rather spend the money and see a dent in my student loans that have been lingering far too long.
But thank you for your well thought out suggestions, I really do appreciate it.
Hope, would you be willing to do a post sharing what your income is, like an average over the past year or past few months? It’s a little confusing because the last income posts I remember from you were saying you were maxed out and didn’t know how to increase your income. With the budget you provided here, $72000 post tax income is quite a big jump so unless I missed something, it’d be nice to see how you got there. Is a majority of your income from long term contracts with several different clients?
I think the budget looks pretty good. And I think you should be able to stick to it pretty easily. Of course, if earnings dip, you can start cutting non essentials. I do agree that retirement should be a little higher priority. I am glad to see a comprehensive, long term budget.
I’m stunned by the amount listed for auto and renters insurance. We pay about $2,400/year for home & car insurance. Our cars are an ‘18 and an ‘07. I know you’ve had accidents, but my goodness that is high.
I would love to see you come back at the end of February and show us exactly what you spent in each of these categories and compare that to your budget. It will show you what’s working and what needs to be adjusted.