Monday, February 13, 2012

Missing Money Monday-Part 2

Don’t you ever wonder what other people’s household budgets look like? It’s not exactly coveting as much as it is curiosity. Did you know that the average family of 4 in America is living on about $64,000/year? We live in an 1,800 SF house (with a 20% down payment) and at that income, I don’t think we could make the mortgage payment, heat the house and feed everyone. I truly sit in wonderment for those who do it. Clearly, I’ve got a lot to learn.

My husband and I debated on going completely “open kimono” with our budget for the sake of instruction, accountability and transparency on this blog post, but my company has rules against revealing my income, so instead, I’m going to reveal our budgeted expenses as percentages of income. Yours will not be the same, nor should it be. Budgets are a reflection of personal priorities and unique family circumstances. Our priority right now is to save for retirement (15% +) and start saving for college while slowly ramping up charitable giving.

Notice I did not suggest drafting it in stone. This is not the 10 commandments, this is your life. Resist the Type A urge to be inflexible. After only a few weeks living with this budget, we realized that some categories are running a bit short and some expenses weren’t budgeted at all (one time retreats, tax preparations fees). We set up a contingency line to cover these types of expenses while we refine the budget. Two items that are not reflected in the budget, but are accounted for are school tuition and a full year’s worth of car insurance (we only have one car). Those items are paid for out of my annual bonus. Every year, we just pray that it comes. On the other hand, should we experience a windfall, it will go toward home repairs. We live in a 75 year old house. There is no such thing as a minor repair or remodel.

Also not reflected is our already funded 9 month emergency reserve. If you don’t have one of these set up, make it a priority. This account is the reason I sleep at night. Not only will this cover us for awhile in case of an unforeseen layoff or medical emergency, it also is a moral escape hatch should I ever find myself being asked at work to do anything I find significantly reprehensible (my friend calls it her “FU” account).

So here is our preliminary budget:
401k 8.0%
Train fare 1.1%
Medical Insurance 1.8%
H.S.A. 2.1%
Taxes out of paycheck 19.8%
Life Insurance 1%
Lifetime Fitness 0.1%
Mortgage (incl. insurance and taxes) 17.5%
Charitable Giving 2.2%
Gas 0.5%
Electric 0.9%
Phone-Internet 0.3%
Phone-Cell 0.9%
Water 0.4%
XM 0.2%
Garbage 0.2%
Gasoline (car) 3.6%
Dog 0.5%
Lessons 1.3%
Food 6.3%
House Supplies & Toiletries 0.9%
Housecleaning 1.7%
Babysitting 0.2%
Haircuts 0.5%
Car Maintenance 0.9%
Gifts 1.3%
Dry Cleaning 0.1%
Recreation & Eating Out 1.8%
Contingency 1.3%
IRA 7.2%
Kids College 5.4%
Home Care Fund 2.7%
Vacation Fund 1.1%
Car Fund 3.6%

Next week I'll reveal what we are doing to stay ON budget.

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