Getting Starting with Expenses

You’re first task will be to organize your budget categories and subcategories. Create a list of expenses based off what your situation needs.

Housing and Utilities

• Housing Payments (mortgage, rent, insurance, storage)
• Auto Payments (loans, insurance)
• All Home Utilities (electric, water, gas)
• Tech Utilities (phone, cable, internet)
• Health Insurance
• Services (pest control, well services, lawn maintenance)
• Subscriptions (netflix, spotify, prime, costco, aaa, cloud storage, duolingo, playstation plus, gym memberships, club membership)
• Debt (credit cards, loans, outstanding one off bills, any payment that has an end date)

Note the date it’s due each month, the projected or minimum payment and the current balance if applicable. If you have extra time finding the interest rate of any debt is helpful to plug into a debt repayment calculator see when it can be paid off. If you’re so inclined after you get your budget set. This way the info is all in one place instead of scampering about the accounts again to find it later.

Variable Expenses

• Groceries (* -can be included in grocery or use it’s own subcategory)
• Household supplies* (paper towels, laundry soap, light bulbs, batteries)
• Pet Supplies* (food, litter, medication, grooming)
• Toiletries* (make-up, razors, supplements, band aids)
• Take Out
• Eat Out
• Gas
• Childcare (daycare, sitters, tuition, therapy, clubs, sports)
• Fun/ Hobby / Date night

Just note the amount and frequency in which these expenses come for now. Some may be monthly, others weekly, some may even be quarterly. You can adjust them to the same unit later. Just mark down what you’re spending currently.

These are your flex categories which will vary greatly for each person, season and situation. Most importantly I’ve found, is to be realistic about which areas you are overspending in. You may think your pet supplies budget is way to much compared to others. Or maybe you can account for eat out and takeout together or not at all if it’s infrequent enough to come out of date night money. Either is fine so long as it aligns with your priorities. Maybe you need thrifting money to get it’s own budget.

Do what works for you and when you come up with a number try to at first just write down what you’re actually spending in that area. You can always come back when you get your total numbers and lower it. But at that point you’ll have a true idea of how much overspending you may be doing and therefore how much you actually need to trim.

Maintenance, Savings and Investments

This is the category that will make it worthwhile.

• Home maintenance– this is where you look for cashflow to pay the emergency plumber, clean the dryer vent, perform maintenance on the ac or replace the refridgerator. I’ve heard using 1% of the homes value per year or $1 for every square foot per year. Plug both in, consider what previous repairs and services you’ve encounterd and use your best judgement. Personally the idea of saving more as a homes value increases to make the most sense. But in a rental situation I can’t imagine even $1 per square foot to be needed, though I would still have at least some put away for when the vacuum cleaner goes or what have you. You’ll roll over any unused balance to next year to build a cushion for work only seen every few years.
• Auto Maintenance– think of your usual suspects such as oil changes and new tires but don’t forget document type expenses such as registration or even liscense renewal in some areas. As well as emergency type repairs. I would think a minimum of $500 per vehicle, per year would be a safe place to start even for newer vehicles that you don’t plan on replacing anything on. You’ll roll over any unused balance to next year to build a cushion for work only seen every few years.
• Tax– If you’re used to paying taxes every year account for it before you get the bill. It could be property tax on your car or home or income taxes come February. If you get a refund more often go ahead and note that on your income list instead. While I don’t love to count on it as income it can make the difference of being able to sleep at night if a portion you probably can depend on is what will cover your auto maintenance account for example.
• Medical and Veterinary– Include some portion for co-pays and medications as you see fit. Also look at things like new glasses or contacts, emergency inhalers and the like. As well as of course an emergency fund equal to your health situation as it stands.
• Clothing– This is unique to each household. It could be very small for some and significant for others. I would only caution that if you feel like you spend nothing on clothes to at least evaluate the cost of perhaps one pair of shoes, fresh stocks of socks and underthings, and a few novelty items per year such and pj’s, jeans and clearance t-shirts you bought in four colors.
• Gifting and Holidays– There could be several detailed budgets or one or two large lumped ones here. The idea is think down the list of the total yearly expenses for… Birthdays in the house, out of the house, gifts outside of birthdays such as anniversaries, weddings, graduations and showers. Whatever holidays you hold most dear. Could be the magic of Christmas or the killer Halloween party.
• Vacation– The category that’s only for those who don’t need a budget, amiright? Look, even a very modest few hundred a year can afford a local staycation to look forward to on a long weekend. Or a hotel an hr away in some scenic quiet place. Part of the yearly outlook includes assessing what kind of life you WANT to fund as much as what you need to survive.
• Goals– You may decide you don’t need adventuring money but you really want to save up for a number of cool toys or to invest in remodeling a space. Any number of worthy goals that need funding can go here.
• Deep Savings and Investments– This was the hardest one to come to terms with and admittedly the one we cannot manage to add given our current income. However at the soonest opportunity we will be putting away towards building 3 months of expenses in case of dire emergency. After that we’ll be splitting this budget between getting to 6 months of expenses saved and investing in your usual boring investments. Use your own judgement on what you can afford to put away here. If that answer, like ours, is not this year… at least come back and note down what 3 and 6 months expenses looks like fully funded so you can mentally imagine how much you’d need to put away to get there.

If you’re at a loss to get started here it may help to look up or think back to previous services and expenses and how much they cost. If you can average a $60 oil change 3 times a year you know you’ll need a minimum of $180 just for that part of the auto budget. Maybe you’re adding freon every summer and new windshield wipers every spring. That brings us to maybe $275? $40 for registration and a little emergency repair fund can easily bring us to a round $600 a year.

Once you start thinking of your expenses as an annual event you can pick out patterns in your spending that otherwise go unnoticed. You could even mentally check through the months and ask yourself if theres any yearly chore or expense you know you’ll encounter. Such as mulching the landscaping or buying school uniforms.

When you’ve got that all out take some space before moving on. You’ll think of other things you have to add as you go about your day. Remember you’re planning for a whole year and I put aside the month of October to make sure I do a thourough job of it.

I’m ready for Task #2