When B and I started our family budget almost two years ago it was with the goal of living well below our means so that we could maximize our savings and not feel a huge hit when we had kids.
Because we’ve chosen to live pretty frugally, the numbers work for me to stay at home and for us to live our lifestyle and contribute to savings (minimally), so we had to make a decision about that when we found out Thomas was on his way. I talked a little here about how my career isn’t conducive to taking years off at a time, but we really tried to focus on what was best for our family with this decision. For the last year or more my salary has been relied on mainly for savings – savings to replace the car I drove with a family car and to build up our emergency, savings and investment funds. It feels really secure to transfer an entire paycheck to savings every two weeks. That’s a security that was hard for us to fathom giving up in this economy. Plus, B’s in school part-time on top of his full-time job and the stress of being the sole provider for our family in a fairly unstable economy is not what I want for him right now. So for now, we’ll continue to be a two income family. But we still tweaked the budget because babies cost money.
Almost every budget category took a hit so that we can ensure we live below Mr. B’s income even with Thomas here. Our overall goal is to establish a way of life we’re comfortable with so that as one or both of us move up in our careers, extra income goes to savings and not our lifestyle. Sure, we’ll upsize our house (and therfore probably mortgage) someday, but our goal is to live and save on one income. We cut $375 from our monthly budget. About $160 of that gets reabsorbed into the budget to account for Tommy’s expenses, and the other cuts were made to continue to work toward our goal of living frugally so we can maximize savings.
Budget Cuts
We use the Envelope System of budgeting. Every year we sit down and reassess the envelopes to decide if our old budget still makes sense. But this year we also restructured in May. I’m not going to lie, we haven’t been great about the envelopes in the last couple months – but we’re back on track in September.
- Groceries – $50 cut
- Eating Out – $25 cut
- Casco – No cut (I went to bat for Casco in the budget cuts, B wanted to knock him $15)
- Clothing – $50 cut
- Gifts – $50 cut
- Personal (toiletries, haircuts, etc) – $25 cut
- House Spending – $25 cut
- Monthly Spending – $150 cut
And we added categories for the baby – not all of which apply right now, but will down the road and we figured we should start allowing room in the budget for them. Obviously toys and clothing are personal choices, and for several more months food won’t be introduced at all, but we have a general plan that we’re sure will evolve but is a good starting point.
Baby Categories:
- Diapers and Wipes – $75
- Clothing – $25
- Food – $50
- Toys, etc- $10
And then there’s daycare, of course, but that’s a separate bucket in our minds because daycare and my working go hand in hand. So that’s how we’re handling baby expenses here for now – we’ll reassess when we need to and change if things aren’t working out. How about you guys? Any budget tricks you’ve been practicing lately?
Ugh, I feel so maxed out on budget cuts at this point. I really miss having two incomes. I know we’ll be back there soon but in the meantime… sigh.
I’m guessing that you’ll underspend in the diapers category, especially as Tommy gets a little older. Good job keeping on track with your saving! We decided to remain a two-income family primarily for purposes of college and retirement savings, which are too important IMHO to sacrifice.
great job! now that we also use this system, i really can’t imagine not using it! glad you guys have figured out what’s best for your family at this point in your lives – but thanks to your planning and frugality, you will have (and be able to realistically use) options.
yay for living within your means!
I totally hear ya! Sounds like you have a great gameplan that is working for you!!
we do something a little different, but it works the same, i have a hard time with the specific categories. here is what we do. thanks for sharing how you manage
Hubs and I do a similar system to your envelope system but keep a spreadsheet of how much money we have in savings for each of our ‘buckets’ (vacation, vet bills, groceries, etc..). Last year we paid off our car and saved up for 4 months worth of both of our salaries as our ‘emergecy fund’ and now we are aggresively paying off our house and should be paid off by 2016. Hubs is saving money by putting away a ‘car payment’ each month into his savings account. His 1998 sedan has maybe 2 more years left in it and by that time we’ll have enough saved up to pay cash. Goal is to live DEBT FREE!
You and our bil and sil inspired us to go back on the cash budget system this month in the categories we continuously go over budget in – groceries, personal spending and eating out. The amount we have spent this year in eating out has been disgusting and we’ve had enough. So, we cut it by a lot this month and we’ll see how we do. So far so good (although it’s only been 7 days.)
With the new house, we added another house payment (which was negligible, but still) and TONS of expenses to fix it up. Something had to give.
We’re also trying to live on one income, which can be trying. I have a tendency to want things . So, I’m working on that and have realized that financial security is so much more important and tchotchkes. You know how I love those things.
Thanks for the inspiration. I’m particularly inspired that you cut your already tight budget to be more financially secure. And impressed.
We’ve been using the same system since June and so far we love it! It helps keep us accountable.
We are also very successful with the envelope system….it is just sticking with the discipline to do it every month is hard. But we need to get back on the wagon and this post is inspiring me to do just that. Thanks for sharing!
Way to go! That’s really impressive that you’ve been able to cut so much from each category. It’s also inspiring to read about other couple’s success with the envelope system. Thanks for posting.
That was really interesting, thanks for sharing with us. I wonder how well you’ll be able to stick the new numbers, especially variable costs. What do you do for Christmas gifts budgets? Do you spread it over time or is the Dec gift budget larger?
I really might have to consider doing this. My sister-in-law Theresa and I have a budget date this weekend. We’re going to help each other set budgets and set up savings. Thanks for sharing about the envelope system!
You are so smart to do this, we so underestimated baby costs. The best part about those cuts though, is once you have your sweet little baby at home you won’t even mind them! Thanks for all of the continued inspiration