Photo by Alex Livingston on Unsplash
I feel pretty good about the first budget of 2020. I’ve been preparing a monthly budget consistently for several months now. It is such a valuable exercise. It forces me to be intentional about my decisions and has made me feel much more in control of my money.
I’ve based the January budget on income of $8,000 this month.
I use Dave Ramsey’s EveryDollar software to do my monthly budgeting. Instead of using the premium version (EveryDollar Plus), I use the free version. The free version doesn’t connect with your bank and credit accounts, so I am intentionally forcing myself to really connect with my numbers, instead of being able to simply drag and drop imported expenditures. This forces me to manually capture every single amount spent each month.
According to the summary of spending that appears in EveryDollar, here’s how the percentages of planned spending breaks down for the month:
You’ll see that giving (tithe), savings, housing, transportation, insurance, and debt comprise a total of $6,482.02 – 81% of the budget. A significant chunk of that is going to savings for that beast of an HOA special assessment I have coming due in February (½ of $8,200) and early March (½ of $8,200).
What I pay myself consists of both payroll and shareholder distributions. In determining what I’ll pay myself, I balance the two. (See The Tsunami Situation – Tax Edition, which explains why business owners often split their income between W-2 employee income payroll and distributions as an owner).
Lifestyle – My Lifestyle category allocation this month is a bit higher than usual. I’ve allocated $450 for a trip that I’m taking to Chicago this month to support a friend who is graduating from a professional program. When she invited me to come, she told me that she would pay for my airline ticket and hotel (because she knows that I’m on my debt-free journey). The $450 I’ve allocated doesn’t include the flight or any hotel expenses. It includes funds for food when I travel as well as a gift (like flowers, dinner or something) for my friend.
Food – This is also higher than normal (for a few months in the later part of the year, my grocery budget was $100 for the month). I’ve been changing my diet and trying to figure out a sustainable eating plan that will allow me to be at my desired weight without having a bunch of irritation and tension around food choices. I’m eating things I haven’t eaten in years. My aim is to figure out what works well for both my body and my budget. So, some experimentation is required. I’ll share more about this in a later post.
Sinking Funds – This month I resumed the funding of my sinking funds. Since I had some funds in the accounts, I stopped funding them in the later part of last year. With this being a new year, however, I want to make sure that I have the money I need for what might arise this year. My sinking funds are for the following needs:
- Home Repairs and Maintenance
- Car Replacement/Repairs
- Gifts
- Clothing (this is included in the “Lifestyle” category)
I plan to have a great start to the new year!