Budgets are SO. Damn. Sexy… said no one, ever, lol… okay, maybe some finance people say it. But I am by no means a financial expert. AT ALL. I do like me a budget, a spreadsheet for tracking expenses, and having a savings plan though. I guess it’s the Excel nerd in me, and the self preservationist.
I’m not perfect, and I definitely go on online shopping sprees from time to time. And then my brain catches up, and I realize what I’ve done. It’s all about balance though, right?
Some back story on my financial history. Growing up we didn’t have a lot of money, but you wouldn’t have known that from the outside. Heck, I didn’t even know the full extent of it from the inside. After a series of unfortunate events, we ended up downsizing from the large, single-family home I grew up in to a townhouse a couple of miles away. We were all relatively healthy and happy, and that’s the most important part. And then a series of very fortunate events turned everything around and all is good now.
Despite the ups and downs while I was in high school and college, I was very fortunate to live with my parents, rent-free, after graduation, which afforded me the opportunity to pay off my school loans and my first car much faster than I ever expected. Then I started saving for what ended up being a down payment on my first home. At the time I didn’t know that’s what I was saving for, but being able to limit my expenses made all the difference in the world. Of course, the trade off was living with my parents until I was 31 haha, I jest, I jest…
All that being said, my financial situation, and therefore my budgeting techniques, may be different from many, or even most, millennials. I don’t know this for a fact, but I have a hunch that I’m starting from a somewhat unique vantage point, and for that I really am extremely grateful.
I am a single, 30-something woman, living by myself, on a decent, albeit not huge, income, making my finances work without living paycheck to paycheck. I actually don’t have a strict budget in place, though sometimes I think I should. Nevertheless, I try to keep my spending within certain limits. I read a study somewhere about the median cost of groceries for certain household types and age brackets, and I fell into the $75 every two weeks expenditure bucket. So based on that stat, I set my weekly grocery budget at $37.50 and if I go over, I try to cap it at $50. You can read about how I track my grocery tab HERE.
I have a few credit cards to my name: three generic and three tied to specific retailers (Amazon, Apple and Old Navy). I pay off all balances in full every month (unless Apple is having a promo with no interest for 6, 9, 12 or 18 months, depending on how much you spend. NOTE: I only make big purchases during these promos so I can spread out the payments).
I hardly ever use the first credit card I got, but I make sure to keep it active with an occasional charge so I don’t take a hit to my credit score. One of the generic cards is only for groceries, gas and car expenses. Other than that, I typically try to keep my total balance for all cards within $300 (usually $75 each across four of them). However, I am human, and there are times when I go overboard and next thing I know my Amazon credit card has a larger than expected balance. Why is Amazon so addicting?? Why do they sell EVERYTHING??? Why do I lose any shred of self-control???? Whyyyyy?????
I have a Google Sheet set up to track monthly expenses, both fixed and variable. Before the new year, I take a couple of hours to set up the workbook for the entire year, looking at the calendar and inputing every pay day, as well as when my mortgage comes out and any other fixed expenses, and also the due dates for my credit card payments. After getting burned a couple of times (hello $12 overdraft fee, I see you), I also have a running total column that shows my new checking account balance after every paycheck goes in and every payment comes out. That has been a life saver! Because I’m a self proclaimed Excel nerd, I also have a column setup to make it abundantly clear if I’m going to go in the red. Whoa Nelly!
I reconcile my spreadsheet against my online bank transactions about once a week to make sure nothing weird is going on. I have automatic withdrawals for my fixed expenses, and I set up all of my credit card payments for the next month, to be paid on their due dates, during the last week of the current month (once all billing cycles have ended).
I typically do not use my debit card for any purchases. I don’t like messing up my spreadsheet with random purchases. I’ll make and track the occasional ATM withdrawal, though I hardly use cash so it’s very rare.
I also track any incoming money (any gifts, or if I have to transfer money from a savings account to cover an overzealous spending spree).
And there’s a spot to track saving and giving, more on those in a bit!
Much like checking my bank transactions, I also check my credit card activity a couple of times a month. First, to make sure no fraudulent charges are happening; and second, to make sure I haven’t gotten in over my head. I’ll update my expense tracking spreadsheet mid-billing cycle to see how I’m stacking up and if I’m over budget I’ll make sure I stop spending for the rest of the statement period.
From time to time I’ve also implemented a spending freeze (other than necessities like gas and groceries, of course) for a whole billing cycle. I’m actually getting ready to start one from 3/15 until at least 4/15, or longer if I’m able to stand it. This helps me get back on track, and lets me build up a cash buffer so that I can save more for big purchases/renovations/retirement, etc.
Saving and Giving
I make it a point each month to save as much as I can without strapping myself financially. I like my checking account balance to be within a certain range at the end of the month to cover the next month’s expenses and anything over that amount gets put away into savings. First and foremost is my IRA contribution. I actually stash this away in a holding account that way in case I need to access it, I can do so without penalty. I transfer it just before the tax cut off so I make it into the contribution year. With our financial history, my parents really stress the importance of saving for retirement, and even though it’s tough to sock such a large amount away each month, I make sure to put away the maximum amount every year.
I have a small savings account with my regular bank, mostly for overdraft protection– though that’s not happening again thanks to my running total column! But I digress! I also have a few other savings accounts with two online banks, that way the funds can’t be easily accessed/immediately transferred and therefore can’t be used on a whim. I have accounts set up for emergencies (like an unexpected toilet leak, fun!), a rainy day slash speed bump fund for normal expenses in case I wouldn’t have income for an extended period, plus an account for my car insurance deductibles in case I should have an(other) accident.
I recently read about and started a savings account for sinking funds, which are recurring costs that come up each year that you should stash money away for so you don’t have to put them on a credit card (or so you can transfer the funds to put them toward your balance when you pay it off each month). These are things like car registration/inspection/maintenance, the rare haircut I treat myself to, my Amazon Prime membership(!), etc, etc. You can read the article HERE. I just started this account today, so it will take some time to build it up but hopefully I’ll have it ready for next year.
And I also have a renovation fund I try to contribute to each month. I put anything leftover in there. I am currently planning a bathroom reno, and to be honest, I don’t know how much I’m needing to save for that. But I think it’s going to be A LOT, so it might be a while before I have new tile and fixtures and floor! I know where my tax refund is going!
I also allot a certain amount each month to give to charity. It certainly isn’t equivalent to a 10% tithe, but it’s something. If there’s a national/natural emergency, I’ll give to the American Red Cross. If a family member/friend/coworker is collecting for a cause, I’ll give to that. I also donate to some international charities that I put on rotation as well. My contribution is small, but I feel good knowing any little bit can help and I’m grateful that I’m currently in a position that I’m able to give.
I know I should probably ramp up my savings from a regular high-yield account (high yield, ha, that’s funny!) to something with higher risk and potential for higher return. I’m currently working on building up the nerve to do that lol…