Kim asked for an in-depth Envelope System post, so I'll break it up into a couple parts, starting with establishing our budget.
B and I are DINKs. Double income, no kids. We love being DINKs (for now). But for 8 days in November, we were SINKing suddenly like the Titanic. Which left us with the bitter realization that while we pay off our credit card balance monthly, pay all of our bills on time, and contribute something to savings every month, we weren't totally aware of where we were spending all of our money. And on November 14th, we had no idea how long we'd be SINKing, or how much (if at all) we relied on my salary. It was time for a budget.
Establishing our budget we took into account two things:
1) Where do we spend money already?
So first things first, I categorized every single expense in November and December to get an idea of where we did spend our money so that our budget would be reasonably based on where we spent money on a day to day basis.
Like most people, our expenses fell into the following categories:
House (Mortgage, HOA fees, repairs, projects, furniture, etc)
Vehicle Expenses (Car Payment, Gas, Oil Changes, Routine Maintenance, big repairs)
Utilities
Food (Groceries & Eating Out)
Pets (Food, Vet bills, toys, medications)
Personal (Medical expenses, Clothing, Gifts, Personal Supplies, Personal wants)
Entertainment (Movies, Date nights, Friends nights, Activities, Vacation)
2) What's our goal?
We realized that our main goal was to be able to cover all of our 100% necessary expenses, and contribute to savings, on one salary. After breaking out the categories, we looked at expenses that won't change regardless of our habits: Wine, Mortgage and HOA fees, Vehicle Expenses, Utilities, Medical, most pet and food expenses).
So that's how we structured our budget, minimizing unnecesary expenses, allocating the majority of our salaries to the necessary expenses, plumping up our savings accounts for emergencies, future big projects and purchases (finishing the basement, our next house) and retirement, and using a small portion of mine for fun things - like our weekly allowance to spend however we see fit and a small Vacation fund.
And now back to paint colors and area rugs until the next edge-of-your-seat installment of Adventures in Budgeting.
Food Stamp Budget Grocery Shopping
7 minutes ago
Great post! So, if I understand correctly - you are essentially trying to do this from one salary? Do you put the other salary directly into savings?
ReplyDeleteWe also budget and we sit down weekly to track it. It makes it really easy to stay on track when you have a goal and plan.
Thanks for sharing!
I like how wine is one of the expenses set in stone. Ranks right up there with the mortgage, eh?
ReplyDeleteOnce again, I really like the envelope system, too. (Most days, anyway. Every once in a while M has to pick me up and get me back ont he band wagon.)
ReplyDeleteAlso, I can't believe that your parents used to live in NU. I bet their house and my parent's house weren't that far apart.
I am really interested to hear how you do everything on one salary!
ReplyDeleteWe pay all of our bills + retirement & some other savings on one...but we spend all of the second salary for vacations and fun stuff.
I love the envelope system! Thats how we started out when we started budgeting.
ReplyDeleteHey everyone - To clarify, our goal is to be able to handle everything on one salary, but currently we dip into the 2nd for vacation, fun money and little things - the first covers necessary and unchanging expenses and some savings. The rest of the 2nd salary is allocated to savings for those big things that we're planning for in the future. But it's our goal to be able to put the entire 2nd salary into our future fund pretty soon.
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