Reworking The Budget

>> Wednesday, July 22, 2009

I've been somewhat lazy about budgeting the last couple of months. I've needed to rework our budget for awhile now but have been avoiding it because it's not a very fun task. And honestly, I've been avoiding it because I really didn't want to have to look at how little wiggle room there is in it these days. So I spent a little time this morning doing what I've been avoiding, reworking the budget. Almost 8 months after my husband went back to work after his unemployment, we still seem to be adjusting to the new reduced income. When we made up our first budget about 15 months ago, we really didn't think about budgeting in terms of percentages. We just gave our money a place it had to go and put it there. This morning I was watching the Today show and their group of financial advisors gave the following percentage guidelines to use when creating your budget.
-10% long term savings
-35% home-mortgage/rent, property taxes, insurance, maintenance
-25% daily living expenses
-15% transportation-car payment, insurance, gas, maintenance
-15% other-debt reduction, etc.

So I sat down and started going over our expenses. It was somewhat discouraging but it is what it is. We are taking steps to reduce our living expenses and possibly increase our income over the next year or two but for now we have to make the best of our current situation.
Here is the reality of our current budget percentages:
-13.5% giving-This is non-negotiable for us.
-40% home-Ouch! Before the job loss this would have been less than 25%. If the housing market was in better shape, we'd go ahead and sell. For now we're staying put but exploring our options.
-15% transportation-We don't have a car payment thankfully! This really helps in this category. We can pay for gas and insurance and still have some left for future car savings and maintenance.
-4.5%-long term savings-The 10% suggested is supposed to be non-negotiable but that's just not our reality right now.
-27% daily living expenses-As much as I would like to trim this a bit I'm not sure how. We've cut things so much over the last year, I'm not sure where else to cut.

So now I have a better picture of our money and where it needs to go. It's just a matter of actually being able to put it there. We have back to school fees, multiple doctors and dentist appointment co-pays, birthdays and so many more extras coming up the next couple of months that making them all fit into the daily living expenses category is going to be a challenge. But I have a goal to work towards and will just have to be smart and creative to reach it.

I think it is easy to develop budget fatigue and lose sight of the big picture of your financial goals sometimes. It was helpful to take a fresh look at our finances and change the way I've been viewing budgeting. I feel re-energized in a way and ready to take on this new budget. How does your budget compare with the suggested percentages?


Becky,  August 19, 2009 at 7:30 PM  

I am so impressed that you and your dh managed to put together a budget. We took a Good $ense Budget workshop several years ago but could never quite figure out how to put it all together. I thought I knew what we spend where but I always got thrown off when an unexpected expense or something I forgot popped up. Can you give us some advice on how to get started budgeting? Thanks

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