Updated: Budget Breakdown
It's been more than a year since we went over our budget with you. Since then we've refinanced our mortgage, decided to invest more in our health (chiropractic + food), got raises at work, completed our emergency fund, had a baby, depleted our emergency fund to pay off our second mortgage, and I got a new job. So, it's clearly time for an update.
Based on take-home pay, here is how we compare to Dave Ramsey's recommended percentages.
[ultimatetables 2 /]
- Charitable Gifts, 14.3%
This includes all charitable gifts you make during the year. We tithe 10% of our gross income. We also sponsor a child from Burundi, which is a $35 monthly donation. Those are our two ongoing monthly gift commitments. We also donate to the MS Walk each year, and additional charities around the holidays. Those amounts get cash-flowed as they come up.
- Savings, 7.3%
Are you saving for retirement, emergencies or college? We are currently saving as much as we can each month to create a $15,000 emergency fund. (We have $2,500 left to go until this is done!) This money will not be touched unless we have an emergency (job loss or medical issue). Once that fund is complete, we'll start to put a similar percentage away each month for Rooney's college fund.
Note: We also save 6% of our gross income for retirement, but it comes out of our paychecks before we see the money. So, that is not reflected here.
- Housing, 26.1%
This includes our mortgage, real estate taxes, homeowner's insurance, lawn care, repair and maintenance fees, and home decoration. I breathe a sigh of relief when I see this number at 26.1%. Why, you ask? Four years ago we spent 38.4% of our money on our house. Last year it was 34.7%. Thank goodness for refinancing!
- Utilities, 8.4%
This includes electric, water, gas, cell phones, trash, and Internet. If you have cable or satellite TV, that goes here, too. Most of these are basic necessities, but we've canceled our cable and tried to get low rates for the other line items. The largest cost for us in this category is our iPhone bill.
- Food, 9.6%
This accounts for groceries and eating out. This number is higher for us than last time, as a result of our desire to eat more organic and local foods. Definitely worth it, in our opinion.
- Transportation, 8.1%
This includes gas, car insurance, and saving for a new car, repairs or tires. We've got two paid-for vehicles, so gas is our highest cost in this category. We spend about $70 on gas each week! We are not currently saving for a new vehicle, but we do save year-round for repairs and tire replacements.
- Clothing, 2.0%
For adults and children, as well as dry cleaning and laundry costs. As much as we love clothes, I'm surprised this is so low. But, we dress Roo in gifts and hand-me-downs, for the most part. And, Eric and I certainly don't need clothes, so we limit ourselves to $10/week.
- Medical/Health, 0.7%
This includes disability insurance; health insurance; dental insurance; and doctor, dentist, chiropractic and optometrist visits. Our health insurance and flex money (for copays, doctor's visits, chiropractic visits, prescriptions and medical expenses) comes right out of our paychecks, so this amount is very low on our budget. I also get free health and dental insurance through my work.
- Personal, 22.1%
Hair care, toiletries, date night, child care, babysitters, cosmetics, school tuition and supplies, education, tutoring, child support, allowance for children, alimony, subscriptions, organization dues, gifts (including Christmas), blow money, weddings, and miscellaneous charges.
As you can see, this is where our budget goes out of whack. It's such a broad category. Our largest costs in this category are day care ($124/week) and gifts. We spend more than $1,100 on gifts each year. That can be something you don't budget for or think about, but it sure adds up with baby showers, birthdays, births, Christmas, etc. (Christmas comes at the same time each year - don't let it sneak up on you!)
- Recreation, 1.5%
This includes vacations, Netflix, movie and music purchases, etc. I was surprised to see that we came in very low in this category. I think that means we should go on a vacation, don't you?
- Debts, 0%
Student loans, car, and credit card payments. No, thank you. We're debt-freeeeeeeee!!!!!!!!!!!!!!!!!!!!!!!
>> No matter what your percentages are, they should add up to 100%. We spend all our money on paper before we get it so that we make rational decisions with it rather than act out of emotion. If you don't have a budget, learn how to get started.
>> All numbers are based off our November/December 2012 projected budget.