This post is about how I determined what to budget for each category last year and how I’m planning to change that, if at all.

 

Here are our budget categories, the average we have spent each month (Jan-Oct) and the budgeted amount (at the beginning of the year- some values have changed)

Student Loans: 1,087/685

School expenses: 781/850

Bills: 2,183/2,135

Car: 638/190

Credit Cards: 26/15

Groceries: 401/450

Medical: 25/0

Eating Out: 159/150

Allowance – me: 162/125

Allownance – C: 88/75

Pets: 181/0

House: 372/0

Misc: 249/0

MIL: 0/0

Savings: 180/500

 

Student Loans: The budgeted amount is the minimum due. For the first half of the year, C was still getting unemployment, and we put almost all of that into student loans (hence our average monthly spending being so much higher than the budget.) The minimums on my graduated loan aren’t scheduled to go up this year, so the $685 will remain the budgeted amount for 2011.

 

School Expenses: Since these expenses only come up every few months (C’s school is on the quarter system) there’s an averaging out that has to happen. I also over estimated what he would pay for text books. Which is fine. I’d rather have extra money than not enough. This category is the most up in the air, as C will graduate with his BA this spring, but has not decided if he is going to continue school (go for a BS or an MS) in the fall. Given that, I will probably continue to put the same amount away, and if we don’t need it for school, we have the start of a great vacation fund.

 

Bills: 2011’s number was based on the average amount we paid in 2010. I will change 2012 to reflect the average amount we paid in 2011. This will take into account moving the Netflix monthly charge here and the fact that we added the MIL to our cell phone bill.

 

Car: This was a fail, pure and simple. I did not account for the new tires the VW needed or the work that had to be done on the Chevy before it could be up and running again, and the cost of adding the Chevy back on to the insurance was more than I was expecting.  We also had a major service on the VW in January, that had been budgeted into 2010- which is skewing this number. Still, it definitely needs to be adjusted up, just probably not up to $600. I’m thinking along the lines of $350/month, with most of that going in to savings for future work that may need to be done on the cars.

 

Credit Cards: I am getting rid of this category. The Netflix bill will move to bills.

 

Groceries: I would like to adjust our budget down to $350 for 2012. I know that’s $100 less than I budgeted in 2011, but it’s only $50 less than we’ve actually been spending. In addition, I intend to move the dog food and treat expenses (which have been figured in to the grocery budget) over to the Pets category. That, along with the fact that JZ will now be helping with the grocery bill makes $350 seem very doable to me.

 

Medical: I just need to budget $25/month for this. Between my braces and C’s migraine meds, I was stupid not to put anything in this category to begin with.

 

Eating Out: I will leave this at $150/month for now, but it’s the first place that really gets cut if we need to make budget changes.

 

Allowances: Yes, my allowance is bigger. That means that along with eating out, my allowance is the first to get cut if I need to make room in the budget. Otherwise, I think we’ll leave these at the same amounts.

 

Pets: When I did the budget, I planned a certain amount to savings every month that was general not quite emergency fund, but irregular expenses fund. In my mind, that included vet bills, which is why I budgeted $0 in this category. This year, I want to pay closer attention to where our money is going, and I’m moving regular pet expenses to this category. So I think the new budget will be $150/month

 

House: When we first planned on getting the work done so our basement wouldn’t flood, we were going to pay out of savings- we had the money. However, they offered us 1 year SAC financing, so we decided to go with that, and take the money out of what would otherwise be put in savings each month. That will be paid off in April. However, this summer, we’re going to need to replace our windows, so I think I’ll leave this at $400/month.

 

MIL: We sometimes pay for things for the MIL on our credit cards since she doesn’t have one. (Most often repairs for the rental property.) I track separately all the money that comes in and goes out on her behalf, and the goal has been to average $0. This next year, we will want to average -$40, as that’s about what our cell phone bill has gone up by adding her to it (and is about half of what she was paying before).

 

Savings: Last year, this was a general fund that was supposed to include car, house, pets, etc. This coming year, I want to separate things out a bit. Still, I’m hoping that we can put away $75/month for vacation/general savings.

 

If you’re paying any attention to the numbers, you’ll note that I’m planning on increasing more things that I’m decreasing. But, we will also be getting paid $400/month in rent next year that we don’t have this year (in fact, that’s what will be going in to the house fund), so with that taken in to account, I actually have extra money to play with.

 

Next week, I’ll put together the whole financial picture for 2012 (as I can see it now) and make “final” budget determinations. (I believe a budget is fluid, so while this may be what I have in place for the start of 2012, it won’t necessarily be what’s in place at the end, as you can tell from above.)