Essay: Patricia’s Money Philosophy Series. Part I of IV: Budget

I believe in paying attention to your money.  I think that how you care for it and what you spend it on make a difference—not only for your own piece of mind, but also in the context of the universe and energy and whatnot.  Money ignored is money that won’t be around for long.  So here’s an incredibly long and detailed four-part series about how I manage my money.  To see the entire series look for the tag “Money.”

I have a budget.

My first forays into budgeting involved a modified envelope system.  I was working at Pizza Hut in high school and I had three categories.  Savings, spending, and my favorite category:  saving up for something good, which I called SUSG.  The percentages are hazy, but I think half of my pay went to savings, and the other half was split between the spending/SUSG category.  I don’t actually recall what “good” things I was saving up for, but I think they were items like clothing that cost more than $50.00 or do-dads I bought from catalogs.  Ah, the life of a middle-class teenager, when everything is covered except for extras.  Still, that savings category meant that I could offer to kick in money for my college education.  My mother suggested I keep it instead and use it to live off of.  This was rather brilliant on her part as I blew through half of it in a freshman freedom spending orgy. Unlike many freshmen, nothing was spent on drinking or drugs as I lived on a dry campus, didn’t drink and wasn’t into drugs.  There was, however, a lot of catalog buying. At the end of the first semester, I found myself horrified at my spendthrift ways, reigned myself in and from then on paid for most of my expenses while in college.  Granted, my parents were paying my tuition, room and board, and later rent, but I managed to work enough to procure my own supplies, clothing and sundries and, when I moved out of the dorms, food.  I kept an eye on what I was earning and what I was spending and I think this was a good stepping stone for supporting myself in my post-college life. 

My budget works for me.

My budget now is inspired by two systems: Your Money or Your Life by Dominguez & Robin.  I also use the 50/30/20 principle first proposed in the book All Your Worth by Elizabeth Warren and Amelia Warren Tyagi.  Your Money or Your Life teaches you to think of your money in an entirely different way and I feel it is recommended reading, even if you don’t follow the program exactly as planned.  What YMYL does is teach you how to personalize your budget to your spending patterns.  Before this book, I would buy notebooks at the store with pre-made budgets.  I loved them, because they had a sense of order, but I usually quickly grew disillusioned as the categories didn’t fit me.  They always included a line for “childcare” that I didn’t need.  I crossed it out and wrote in something else, but the pencil line through the printed text annoyed me.

With YMYL, I tracked my own spending and created a budget filled with categories I actually used.  I dropped the entire budget into an Excel spreadsheet and have been using it ever since.  Not the same one, of course.  Any time something changes financially—every six months or so, but as often as every three or four months—I revise the budget, changing amounts or sometimes even adding or subtracting categories.  My categories are pretty detailed and split into several sub categories, see below for a complete listing.  Despite my thoroughness, I believe you can have a budget with as few as five categories: Savings, Food, Shelter, Clothing, Misc.  However, those categories are going to become unwieldy, unless you make very little money.

I like the 50/30/20 principle because it gives me a good idea of how I should be spending (and saving) my money.  Before I read this book I would always wonder if the amount I spent on groceries (or whatever) was too much.  In this system, Warren and Tyagi propose that 20% of your net pay goes into savings, 30% is spent on wants and 50% is spent on must-haves.  They define must-haves as the bills you have to pay month after month and wants as some fun money right now. 20% goes toward saving for the future. 

Though I was attracted to the 50/30/20 plan’s big emphasis on saving and the firm, and large, percentage, I don’t want you to think that I’ve got the plan implemented.  However, I just reviewed my budgets since I adopted the program and I can tell you that since May of 2008, I have only met the percentage goals with two of eleven budgets made during that time.  So it’s still a stretch goal for me.  This may be because I work a 32-hour week, but am still living as if I work 40.

Current budget categories

Food

Subcategories of groceries, joint groceries, dining out and garden supplies. 

I’m thinking of adding a further category of “sweets” because my dining out category has been over spent a lot the last few months and I think it’s due to the cookie habit I have formed.  The food category as a whole has been tough the last few years.  I’m budgeting much more than I ever have, but still struggling to keep expenses down.

Shelter

Mortgage

This is a joint category.  I’ll talk more about how we handle the joint expenses later.

Bills

individual categories:

student loans, school, cat, car, house holding

The “school” category came about when I was paying for a certificate program to add to my degree.  It has not yet gone away, but has been reduced to a minimal amount.  The “house holding” category is for maintenance of my household supplies.  Like a woman with a dowry, I bring all the kitchen stuff to the relationship. I aim to take all the kitchen stuff with me from the relationship if it ever comes to that and I don’t muddy the waters by buying anything with joint funds.

joint categories:

phone, land lease, life insurance, homeowners insurance, garbage, electricity, water/sewer, yard, internet, saving up for big appliances, joint savings, joint vacation, dates, household supplies, furniture/decorating, cleaning.

The “cleaning” category is how we pay ourselves for housework completed.

Clothing

Work, fun, sport

These used to all be separate categories, probably because I was in my 20s.  Now it’s all just one thing.

Transportation

Bicycle

This category used to contain a category for public transportation, but I’ve been lucky that my employer has provided a monthly transit pass for the last six years.  I guess the “car” category from bills should go here, but I haven’t ever moved it.

Health

Personal care, doctor/drugs, gym

Personal care is all the “stuff” to maintain me, like toothbrushes, shampoo and tweezers, etc.

Recreation

Plays and lessons, vacation, newspaper, computer, random fun things to do

The plays and lessons category used to be horribly overspent until I spent a year pledging not to take any classes.  Now it is only moderately overspent now and then as I want to see more plays than I budget for.  That said, it’s a very minimal amount budgeted each month. I would love to increase it. “Random fun things to do” is my general spending money each month.  I found it easier to lump the movies, the occasional book bought or entrance fee paid in one category than to make separate categories for all of these items.

Gifts

Personal gifts, Christmas, public radio donation, church donation.

I have a budget amount for family/friend birthdays and a budget amount for Christmas.

Savings

3 month

I could technically rename this “8 month” because I finally met my three months of living expenses saving goal.  But I like the historic flavor of it.