Tuesday, January 22, 2013

Budgeting - Variable Expenses

After figuring out our fixed expenses Will and I had a good idea of how much money we had to spend on variable expenses each month. We came up with a list of variable expenses for our budget. Below you'll find the list of these variable expenses. We tried to take into account all variable expenses before assigning a dollar amount to each category in the monthly budget.  Some categories are more flexible than others and it is with these categories that we managed to "balance" our budget. 

Because some of these expenses only come up every few months, or maybe even only once or twice a year, it was a bit more challenging figuring out how much to budget for each category. We tried to start with expenses that occur every month and work our way down from there. We have since tweaked the budget a couple times to better fit our spending patterns. Here are the categories we came up with along with (not so) brief explanations of what each category includes or why we chose that specific category):

Metro - This is for Will getting to and from work. It includes both the metro and parking fees. It does not include me using the metro - that would fall under "entertainment."

Gas - This number was based on how many tanks of gas we generally go through in a month when we're at home. This does not include any gas for travel purposes.

Food and Household Supplies - This includes all groceries and any household items that are used and        
need to be replaced on a regular basis (cleaners, napkins, etc.). (For us) This does not include eating out in groups (either as a family or going out with a friend), but does include eating out if one of us just grabs lunch out alone.

Entertainment - This includes eating out in groups plus any other activities we do for fun (going to a movie or concert, having a party, etc.). It also includes baby sitting costs if we need to hire a babysitter to go out.

House - Betsy - This includes any items I may purchase for the house. Generally bigger items like furniture, window coverings or larger (indoor) house projects (painting, remodeling, etc). This part of the budget was actually in place before we even considered the need for a budget because I tend to go a little crazy with the spending otherwise. Now, I know how much money I have and don't feel the need to run larger purchases past Will first (although I still usually ask him, but he generally has no opinion if I'm staying within budget). It has forced me to really think about our needs vs. our wants. For example: We need a crib for the new baby. I want to finish the laundry room (likely not gonna happen for many many moons). This particular line item has also eliminated a lot of squabbles about what quality furniture to purchase. I tend to want to buy higher quality, but more expensive items that will last us a lifetime. Whereas, Will tends to want to buy something that will get the job done for now but likely need to be replaced in a few years.

Clothes - To come up with this number we estimated how much we would need to spend in a year on clothes per person. We then came up with a monthly allowance based on that estimate. We've already had to up the budget for this line item slightly.

Donations - This is the amount of money we donate to organizations other than the church. We came up with a yearly amount we wanted to hit and divided by twelve to come up with this number. Starting next year we will try to keep up with these donations each month instead of making the majority of our donations right at the end of the year when we realize we haven't donated as much as we wanted.

Travel - This includes anything related to travel - food, gas, plane tickets, etc. It does not include our expenses while on vacation. So, we wouldn't include eating out or other activities while we were on vacation under this line item. Such activities would fall under "entertainment."

Car Maintenance - I think this is self explanatory. Anything related to keeping our cars in good working condition falls into this category.

House Maintenance - Similar to car maintenance, this includes anything required to keep our house in good condition.

Miscellaneous - This category is key. There are so many little expenses that come and go. We didn't want to have to have a line item for every. single. little. thing. So, we created this miscellaneous category. This includes prescriptions, hair cuts, baby sitting costs for non-entertainment purposes (when I teach CCD), etc. Really anything that doesn't fit nicely into another category gets thrown here. We tried to make this for truly random or small expenses. It's the line item with the least amount of money in it

Gifts - We actually came up with a yearly budget for this and keep track as the year goes by. This includes any gifts we purchase throughout the year - birthday, wedding, baptism, anniversary, etc. It also includes any postage necessary to get gifts to their desired location and any gift wrap we purchase for said gifts. I was amazed how much money gets spent on gifts each year!

Surplus - We put any money that isn't specifically assigned to a particular category into this line item. It's pretty small, but allows us to make small adjustments as needed fairly easily.

If you've made it this far, bravo for you! Having a logical, type A personality I tend to enjoy this kind of stuff. I loved coming up with the budget and enjoy finding ways to save money and make the money we do have go as far as possible.

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