RB Budgeting: The Basics {Part 2}

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Last month, I began discussing the basics of budgeting and included a spreadsheet for download that would allow for seeing all one’s bills and expenses in one place. Many of you downloaded it and/or shared the posts (thanks, btw!). Two things that were mentioned in the comments was how hard it is to stick to a budget and knowing how much to budget for certain things each month.

I completely understand how hard it is to stick to a budget. For some reason, for me anyway, it was easier to stay on budget when I made far less than I do now. Granted, I had fewer expenses, but I also did a better job of distinguishing between ‘wants’ and ‘needs’ than I do now so it seems.  And with price fluctuations, sales, and seasonal variances, its also hard to budget specific amounts sometimes, especially for food, gasoline, and utilities.

So … I went looking for some guidelines on how much percentage-wise your budget should be split up. Dave Ramsey has this breakdown listed in worksheets at the end of his book Total Money Makeover (affiliate link to the newest edition btw)…

budgetbreakdown

If you add it up for the low end and high end, those percentages equal 82% and 147%, so you pretty much have to adjust as needed for your needs … oh, and Dave also recommends that you over-calculate your grocery budget.

He also noted that it takes awhile to perfect a budget, so if you go over on the first month, don’t be discouraged. Tweak as needed until you get it right.

Besides DR’s budget guidelines, I also came across this blog post with several other budget % breakdowns at A Bowl Full of Lemons while searching to see if I could find other budget breakdowns. Another option is the 50/20/30 Guideline over at LearnVest which is great for singles as well as couples. All of these are great guidelines to use, just pick the one that works best for you at this stage in your life.

Here’s a breakdown of my current budget. Some months I get it right and stay on track; others, well, I’m human 😉

Housing/Utilities – 15% (I don’t live alone, so this number is way smaller than it would be if I lived solo, which I’m hoping will happen next year)
Transportation – 26.5% (this is my biggie because I commute 70 miles RT daily M-F and pay extra every month on my vehicle loan so it’ll be paid off sooner; hopefully just another two and a half years to go based on the current payoff figure!)
Food – 10% average (mostly on groceries; I rarely eat out & stick to discounted happy hour time periods at Sonic and DQ when I do stop for a drink/snack going to/from work)
Medical – 2% (Average based on 12 months. Quarterly Rx refills + OTCs primarily; excludes dental work as that just has to be squeezed in when it hits; I’ve been lucky this year in that I haven’t maxed out my dental coverage yet like I have by midyear the last three years!)
Charity – 2% (I know, I should donate more … and plan to increase this one over time)
Clothing/Personal – 11% (goodness, this is one I tend to blow periodically)
Travel/Blog/Photography/Misc – 11% (another one I tend to blow periodically)
Savings – 15% (sometimes more, sometimes less)
Debt – 7.5% (excluding my car loan; I have one credit card that regularly offers 0% balance transfers that I use to finance dental work when I don’t have the full out of pocket amount for as well as the occasions when I do a little too much retail therapy/have unexpected expenses hit; that balance is currently at $1,500.)

I’m in the process of adjusting these percentages right now to meet some financial goals (savings, paying off the last $1,500 on the BT I have right now) as well as ‘increasing’ the amount on utilities to account for living solo sometime in 2015 and paying it all by myself. For now, the difference in what I pay and the new % will go into the ‘house’ savings fund I have set up.

Another thing that makes it hard to set a budget is if you’re paid hourly, especially if you aren’t always guaranteed a flat 40 hours a week. I’ve been lucky that all three full time jobs I’ve had were all salaried, so with exception to the first check of the fiscal year when insurance rates change and any step raises/COLA increases/longevity bonuses are added in and the two ‘extra’ checks I get a year where insurance coverage premiums isn’t withheld (I’m paid every other Friday, so two months of the year I get a third paycheck), my take home pay always the same.

What I’d recommend is taking the last several months’ worth of paystubs and calculating the average number of hours worked and using that as a basis to budget by if you’re unable to do side jobs or have other ways of generating the lost income on the weeks when hours are cut.

Questions? Want to add to the discussion with what budgeting percentage guidelines you stick to? Topics you’d like to see in upcoming budgeting posts? Leave a comment below 🙂 

  • Camila - September 19, 2014 - 9:44 pm

    Ah I’m so happy about this! I’d been waiting for Part 2! 🙂

    I’m just moving into a flat downtown Edinburgh and for my rent to be 35% my monthly budget would have to be about £900 (1600$) – which is kind of depressing as I’m still looking for work. But when you think of your budget as a whole for the month is that based on all the money coming in during the month?

    I’m going to try to be better at budgeting when I finally move away (again) in two weeks and I based my budget on how much it costed me when I used to live in Scotland. I’m trying to over estimate everything. The percentage breakdown is interesting though! I never even thought of putting my savings and my loan payment in there!

    Also, I don’t mean to pry, but would you include things like weekend trips on your monthly budget? That always skews my budget predictions because suddenly in transportation I have a cost of £70 while most months I’ll barely spend anything since I can walk everywhere.

    Anyhow, thank you so much for these posts, super useful and force me to think of my budget! 🙂ReplyCancel

    • Christina - October 6, 2014 - 12:02 pm

      I’m glad you’re looking forward to the series and found them useful Camila 🙂

      Any chance you can get a roommate or two to help reduce the rent costs? Please tell me that wouldn’t be your share with roommates! I’m envious of your living in Edinburgh, however.

      I do look at all the money that comes in for the money when I set my budget … there’s only a couple months a year where it varies (on three paycheck months). I have been lucky that I have billing due dates spread out across the month so I am able to pay certain bills out of the same check each time.

      Its definitely a good idea to overestimate on items you’re unsure about until you have several months to see fluctuations (especially on groceries and fuel costs). Definitely include savings and loans/credit cards in your budget as well. Savings is ‘paying yourself first’ as Dave Ramsey says … and once all those loans/credit cards are paid for, that’s more money to save or allocate for other things, like travel.

      I do include travel in my budget — for instance, I have another weekend trip coming up that I have most of the cost paid for already (hotel) or set aside, but some stuff will come out of current income (i.e. food, admission fees). You could dub it your ‘splurge’ category so it covers travel on months when you travel, and other items or gifts on other months.ReplyCancel

  • Lix - September 23, 2014 - 10:04 pm

    Right now I basically spend 80-90% of my income on rent and sadly don’t see that changing much any time soon. As long as I can stay afloat, I guess. And keep building my business. I’m trying to spend less on Starbucks and do bigger, less frequent grocery shops, cook more and maybe put some money into public transport for fun. Maybe. It’s hard to justify it. Hopefully one day not too far into the future I’ll be making a normal monthly income, and then I’ll save and bake my little heart out. One can only hope.ReplyCancel

    • Christina - October 2, 2014 - 1:03 pm

      Oy, that’s a lot Lix, although London is a very expensive city from what I’ve read and heard! With wages low due to so many minimum wage service jobs here in the states, most people are like you, striving to just stay afloat. Slow and steady on building the business, definitely try to take advantage of SEO for your site and getting clients to put out WOM for you 🙂 Cooking is cheaper, but its nice to treat yourself to a small cup at Starbucks every once in a while. And I like your idea on using public transport for fun — pick new stops and explore with your camera; would you be able to write off the public transport expenses on taxes related to the business income? Sending positive thoughts/vibes your way that it gets better/business starts flowing.

      BTW, I owe you an email, I haven’t forgotten, just been busy editing/retouching bridal portraits!ReplyCancel

  • Lix - October 4, 2014 - 6:27 pm

    No worries on the email – I’m ready when you are. 🙂 And I hadn’t thought of writing the transport off as a business expense. Probably. I need to get that stuff in order, still don’t have a national insurance number. Been dreading rebooking that appointment but I really need to get those wheels rolling if I want this thing to become my long-term career. Would love to see those bridal portraits! I pin way too much wedding-related photography. Really want to get into that though I feel my camera’s holding me back, sigh.ReplyCancel

    • Christina - October 6, 2014 - 11:19 am

      I’m not sure about other countries Lix, but transportation is a huge write-off here. Granted I write off mileage, but I would think you could write off a transit pass too 🙂 I can imagine getting all the stuff for moving to a new country is a bit of a headache. I can’t share the bridals until after her wedding later this month, but I’ll let you know when they’re online 🙂ReplyCancel

  • […] previously talked about getting started, budgeting for expenses, and how to budget when prices fluctuate … but we haven’t really talked about […]ReplyCancel

  • […] super technical or confusing. I’ve mentioned him a couple of times in past budgeting posts (here + here) in […]ReplyCancel