Last February, I showed you our monthly household budget and our cash-flow budget. Our cash flow budget is updated monthly, and sometimes more than once a month, but we haven’t updated our spending breakdown since February. Given the drastic changes in our debt load, and rising costs for gas and food, I decided to see how we’re doing seven months later.
A Tale of Two Household Budgets
This was our February budget:
This is our September budget:
In comparing them, I see several big differences:
1. A steep drop in our student loan debt from $1700 to just under $1200. We hope to have that closer to $1100 by spring.
2. Our monthly fuel expenses have nearly doubled, and our auto insurance has also increased, although we didn’t change the policy or vehicles. It might be time to shop for a new policy.
3. Our entertainment budget more than doubled, which is odd since we don’t go out very often. I’ll have to investigate where that extra spending came from and see if we can cut it.
4. Groceries went up $40, but household spending came down $65, so we’re actually $25 ahead of where we were seven months ago, despite switching to pastured beef. I attribute it to our switch to the farmer’s market and my discovery of CVSing, which I only did once, but we haven’t had to buy many household goods since then.
5. Our utilities went up $30, which I attribute to across-the-board increases in energy costs. Even though our utility company is one of the cheapest around, it still costs more to make energy than it did a few months ago.
6. Our dining out expenses nearly tripled, and that’s not from the two of us eating out. Looks like my husband has been eating lunch out way more often since he took the new job. Unfortunately, it’s not always practical for him to take a lunch, but he’s working on it.
How to Create a Household Budget
We track our spending in Quicken, so creating this breakdown was as simple as clicking a few buttons. If you don’t use Quicken, check out something like Yodlee, which is free. If you want to make a one-time budget, pull out all your receipts and credit card statements for the last few months. You should also track your cash spending for a month.
Now create your spending categories. You’ll at least need the following:
- Food (Groceries and Dining Out)
- Entertainment
- Transportation
- Medical
- Gifts
- Clothing
- Housing
- Utilities
- Insurance
Many people will also need to include Childcare and Education expenses. Break the larger categories down into subcategories as needed so you can really see where you spend.
Total your spending for a few months and then divide by that number of months to get a monthly average.
That’s your budget. If your expenses change during the course of the year, for example you move, add a child, or send a child off to college, update your budget as needed. You should also update it periodically just to see if any of your spending has ballooned so you can find the cause and resolve it.
How often do you update your budget? How do you use it? Tell me in the comments.
