At the beginning of each year, my husband and I try to sit down and bust through our budget, line by line. Especially after last year for our family and buying a brand new house, everything was so different. Our income hadn’t necessarily changed, but our expenses had gone up a little and our outgoing had shifted.
Regardless of how the last year went for you, this is still something I recommend. Revisiting your budget 2-3 times per year is even better if you can swing it. It’s so important to catch any unexpected surprises or changes before they derail your budget.
Since our budget changed so much this year, I thought I would share with you how we reorganized and revamped our monthly spending.
My husband gets paid weekly, so we based our monthly income on a 4-week month. One of the big changes for us this year was how much we received after automatic deductions. We bumped up the amount we put into our Flex Spending Account AND increased the amount we are contributing to our retirement through his work. Both of these come directly out of his paycheck, so our disposable monthly income had gone down by a decent amount. Both responsible choices for us, but a little harder to manage month to month.
We then wrote down all of our recurring monthly payments, like mortgage, utilities, cable, cell phone, preschool tuition and car insurance. We also included money for groceries and a little personal money for my husband and I in this total.
This is where things changed for us. After all of these things that are basically set each month, we had nothing left in the monthly budget! We used to take what was left over and distribute it to our monthly cash envelopes for expenses like Christmas, clothing, entertainment, fuel, car and more. Zero dollars any way you slice it is still zero. Now what?
We decided to first look at the few months throughout the year that there are 5 weeks, essentially giving us an extra paycheck. We took each of those four extra paychecks and gave them a specific purpose. One will be set aside for Christmas gifts, cards and other miscellaneous holiday expenses. One will be put into savings to help fund our Disneyland trip later in the year and the other two will be for any extra expenses that pop up throughout the year (put into a liquid savings account).
Hopefully this doesn’t come as a knock-down shocker to some, but I do generate a small income from this blog. While I do make money each month, it is wildly different based on the time of year. We have never treated it as set monthly income, rather more like a “bonus” each month. What we chose to do this year was take the lowest monthly amount I made last year and set it aside each month for gas, entertainment, home expenses, pet food, clothing and more.
It took me awhile to feel comfortable with this, as I never want to feel like I “have” to work, but it is what is working for us in this stage of our life. While we won’t necessarily have specific envelopes for each category, we will still pay cash from a general fund. We will just monitor our spending month to month and make sure we are staying within our limits.
I would love to hear about your progress in 2013. Have you made any changes to your budget? Are you just starting on your budgeting journey?
To see our more traditional budget from 2012, read my post here.
If you are like us and have an income that isn’t necessarily straight forward, check out Emilie’s tips for Budgeting on an Irregular Income.
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