It is common to see personal finance bloggers share a monthly budget. This is usually done for one of a few reasons. Motivation for themselves and their readers or for transparency on what they are spending. I think for a lot of people they are very helpful and motivational for either the writer or the reader. It’s also cool to take a look at what other people are spending in different categories. Not that we encourage judgement on what other people spend their money on, because we don’t, however it is interesting to see what people spend just as a gut check to your spending. You won’t see a monthly budget here because we don’t focus on our budget like that.
How we Budget:
I get paid monthly so the bulk of our expenses are set up to support a monthly payment. For some of our other big expenses like insurance (car, house and life) we pay those once a year. It saves money as there is usually a fee to set up a monthly amount and it’s 1 less bill we have to pay each month. We don’t have a car payment so the other expenses are mostly monthly like gas, water, hydro and then 6 times a year we have property taxes. For the amounts that are not monthly we take the total amount that we believe we are going to pay that year and divide it by 12. This monthly amount gets put into a fund (really a line in an Excel budget) and when the bill comes due we pay from there.
For other things like planned spending to renovate a basement or go on vacation we decide how much we want to allocate into those funds and put money aside. When we are ready to spend the money we have it socked away already. As extra protection we are also 1 month ahead on our bills. Just an extra buffer but it helps to make sure if there are any issues we are covered.
Why I Don’t Care About the Month to Month:
As you can imagine budgeting like this could lead to a huge difference in money that is leaving our account on a month to month basis. June is a difficult month since this is when the yearly car and house insurance comes due. In this month we are always spending thousands of dollars more than we would in May or July. So if I were to set a target of spending each month that month I would likely blow it out of the water. When we have large purchases (like our car purchase) that would blow the budget out of the water as well. I feel like every month we would have to justify why we spent what we spent if we had a specific monthly target in mind.
What I Could Do Instead:
I could set up a different budget every month to capture what I think we are going to spend. For the month of June because I know we have very high bills that we need to pay that could be a higher budget amount than I would have in the month of May. To me this seems like too much effort to change how much I am planning on spending each month. Since I set up the budget at the front to cover off these expenses changing on a month to month basis seems like so much effort and truly, I’m lazy.
Where I Could Run Into Trouble:
We track every single cent we make and spend and we have years’ worth of data to look at. If I don’t keep an eye on the money we are spending it could a slow drip to spending more money than we make. If I start to see funds that we have slip down and we are constantly running into money issues then a monthly budget would be helpful. It would focus us to not spend more than a certain amount of money each month to get us back on track.
Keeping Things the Same:
If I look at how we have been spending money since 2013 we have been spending less each year and saving more to retirement and putting more money onto our mortgage. That along with our net worth increasing indicates to me that we are doing the right thing. The concept of making extra work for ourselves to create a different monthly budget depending on where we are spending that month makes me cringe. Again, I’m lazy to do stuff like that and since we have been doing this household budgeting thing for half a decade and things are under control I think we are going to keep things the way they are. I’m much more concerned with how much we spend yearly as well as how much of then goes into our mortgage and our retirement savings. That to me is a measure of success with our money.
Here’s the Thing:
Some months are going to cost more and some months are going to be cheaper. I don’t believe that I am a failure if I spend more money than a budget target that I set out for myself. If you are trying to aggressively pay off debt then sticking to a monthly budget to funnel the extra money to your debt makes total sense. But if you are clear of that and just living a life don’t feel that you need to put extra pressure on yourself to only spend a certain amount of money every month if you don’t want to. If you do, then cool, but you aren’t a failure if you go over a monthly budget. Promise.
Do you set you set a monthly budget for yourself or do you plan your spending in the same way we do? Share in the comments below.