Tuesday, January 29, 2019

Budgeting for 2019

At the beginning of this month, I revised my budget for the new year, based on my net retirement pension, after taxes and other deductions had been taken.  I have always liked to base my monthly budgets on my net pay.  And, I like to refer to my budgets as a "spending plan".  The amounts I budget, allow me to spend up to that amount, without worry, without feeling I am being extravagant!

Admittedly, I haven't always had a budget (or a spending plan!).  But, I was always fairly frugal, initially because I had to, later, because I wanted to.  I didn't spend all I earned, and saved quite a bit.  Then, in the mid 1990s, I became interested in finding out exactly what I was spending and on what!

If I may bore you with some history:

Back then, I was reading some magazine articles with titles such as "How to Live on One Income", etc., and wanted to see how I compared!  These articles gave a guideline of having 3 months' worth of income in a savings account as an emergency fund; but, if you were a single parent (as I was and am), then, it was advised to have at least 6 months' of income saved!  Much later, during the "economic downturn" (or recession or financial crisis; it's known by many terms) of 2007-2009, when people found it hard to find re-employment or had to accept lower paying jobs, single parents were advised to have the equivalent of 1 year's expenses saved!   

I started out with a spending log - I kept strict accounts of every penny I spent, and on what, for 3 months.  Then, I went back through my check book for 1 year to see what my quarterly and annual expenses were  - those  property tax payments which took place twice a year, the homeowner's and earthquake insurance, car insurance, etc., that could be paid in installments (with interest) or in a single installment (without interest).  I added up each of those payments to get an annual amount and divided them by 12 to get a monthly amount - I was going to set aside that monthly amount in my budget and save it towards when I needed to pay it, so that I didn't have to scramble to find that amount when the bill was due.

Many of the articles I read, admonished two income families to try and live on one income and save the second income.  But, I was a one income family (although my mother lived with me and helped with some of the bills - she insisted on paying the water and electricity bill, for example, so that I wouldn't restrict her watering the garden or be at her to turn off the lights!  LOL.)  My dream was to live on 50% of my net income, but I wasn't able to do that with a mortgage ($1,100) and childcare ($750)!  I settled for a budget based on 70% of my net pay, with 30% going to savings.

That was my budget for many years.  I made some adjustments, as needed, of course.  For example, I had to adjust it, during that same economic downturn, when I had to absorb a 20% pay cut due to mandatory furloughs.  There was, too, a very real possibility of being laid-off, which sent me scurrying off to come up with what I called a "bare bones" budget based on a minimum wage job.  I found out that, at the time, even with a bare-bones budget, I'd need to have 2 full-time minimum wage jobs to make ends meet!  This was before I had paid off my house; even if I gave up my house, I'd have to pay rent, and with our high rents in this area, my mortgage on my 3 bedroom house was less than the rent my friend payed for a 1 bedroom apartment (Ha!  Maybe this is the basis of my foreclosure nightmare, the other day!).

My newest budget is my latest revision!  The entire budget is based on approximately 60% of my net pension (a little under that);  just over 40% is still going to savings.

I had some expenses go down (gas for the car, for example, went down from $200 to $50, simply because I am not driving to downtown and back, daily!  I used $75 of that $150 in savings to bump up my budget for car insurance, as it seems to go up, every year; I used $25 of the balance $75 to bump up my gardening budget, so I could buy a few extras like peach trees and soil amendments, etc., and the remaining $50 was applied to bump up my utilities budget).

I eliminated some expenses  by combining them with other budgeted categories while keeping that budget the same (for example, I combined almsgiving ($50) and rosary ($25) spending as one "prayer gatherings" category, while keeping the budget at $50; and I combined the Christmas budget ($10) with my other gifts (birthdays, etc.) of $25 and left it at $25).  The combined total savings of $35 from these two eliminated categories, were applied towards another category!

Finally, I had some categories that I decided needed additional funds!  My doctor visits co-pays have gone up from $15 to $20 and so have my co-pays for some of my medications, I doubled the budget from $100 to $200.  I realized that I had been underfunding the TV/Cable budget (by about $5) and I decided that I should increase the pet care budget (from $50 to $100 - Dancer's recent vet visits weren't exactly cheap!).  Finally, I increased my daughter's Christmas gift (acrobatics lessons) from 5 classes a month, to unlimited (she had wanted to pay the difference, but I told her I will pay the entire amount).  These additional increases were funded with money that would have otherwise gone towards savings.

All in all, my monthly budget went up by $190 (earlier, I thought it went up by $260, but that was a mistake).  It is $190 that is not going into savings, but, I have asked myself just how much I need to save, and for what, now that I am retired! 

This is my current budget, as it stands:

25% of the budget goes to House and Garden, which includes property taxes, homeowner's and earthquake insurance, maintenance, garden care, and household products, such as laundry detergent, dish washing detergent, paper towels, etc.

25% of the budget goes to Utilities, which includes water, electricity, trash collection, sewer service, natural gas (for heating and cooking), telephones (both home phone and cell phones), internet, and cable.

14% of the budget is for the car, including insurance, gas, maintenance, and annual registration renewals.

8% for self care, which includes my doctor visits, monthly medications, parking fees at various medical facilities, clothing, and a $20 personal allowance (to spend as I please, on craft supplies, personal care items, etc.)

The remaining 28% of the budget is for various other categories such as groceries ($75), eating out ($25), toiletries ($10), pet care ($100), the prayer gatherings and donations ($50), gift giving ($25), membership dues (auto club), travel/air fare, tax preparation fees, etc., and the all important "Miscellaneous" ($50)!   LOL!   I like to pad the budget, a bit - that way, I don't panic when unexpected expenses, such as the $667.14 water bill that I received at the end of December (due to the leaking sprinkler valve) spring up, or Dancer suddenly has a $945 vet bill to pay!  It is a bit of a built-in short-term emergency fund.

Because of the way the budget is set up, my actual monthly expenses are less than the monthly budget.  The water/electricity/sewage/trash collection bill, for example comes due only every other month; the car doesn't require maintenance every month, the various insurances are paid once a year.  The retirement check goes into the checking account, at the end of each month, and the money sits in the account until needed.

Some people think I obsess too much over my budget, that I am too detailed with my spending categories, etc.  It may very well be.  But, it works for me.  I like knowing the details.  Financial security is very important to me - there have been times when I didn't have any financial security.  Those days are now gone, but I still have that same mental attitude of not wanting to spend!

Oh, dear!  This post turned out to be a book, didn't it?

Today, I am grateful for:
- Feeling a little bit better
- Chicken soup (made from items in the fridge and freezer, using the last of the roast chicken carcass from the October prayer gathering)
- My neighbor across the street bringing my trash can in for me
- 6 bags of donations being picked up this afternoon
- Having a spending plan/budget


Chicken Soup
How do you set up your budget?

16 comments:

  1. There is a lot of detail in your budget, but it is what is comfortable for you. And you've been working on it for a lot of years. Once you got a system set up and used it for a while, I assume that all of the details don't seem so overwhelming when you work on it these days.

    I, too, worry about money even though we have planned and budgeted well over the years. I sometimes have to work on spending a little money for fun or something that's not totally necessary. That's important, too.

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    1. I think I'd have made a good accountant! LOL. I did once administer a $20 million account as part of my job and I balanced those books to the penny!

      Spending money on non-essentials is hard for me, too. Even when the money is there, I don't want to spend it!

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  2. You have always done very well with your detailed budget/spending plan for many years! You may want to also check with your auto insurance company to let them know your driving pattern has changed and you now drive considerably less miles due to retirement. Many insurance companies offer reduced premiums for a reduction in miles driven. Just a thought!

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    1. Thanks, Carolyn. Yes, I shall ask my insurance people if they can give me a discount. No harm in asking, is there?

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  3. An interesting read. I am always fascinated how other people organise their budgeting. I check off all my expenditure and keep an eye on all my outgoings in a little book. It's a bit old fashioned but it works for me. Thankfully, I'm not a big spender but I set aside different amounts each month for various expenses such as Christmas and mortgage overpayments. I could never imagine not keeping track of it all. X

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    1. Thank you, Jules. I am a pen and paper person, myself. I don't use any of the computer programs that are out there. It has worked well enough for me. :)

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  4. I'm trying to sort out my budget, monitoring my expenditure over the next three months. I want to find enough money to be able to afford a cleaner!

    Your dream about the house and your furniture being removed may relate to the recent bereavements. Apparently, dreaming of furniture is supposed (if you believe in the power of dreams) to be symbolic of relationships with family and friends.

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    1. I hope you're able to find the money for a cleaner, Eileen. Maybe the money from private music lessons can go towards it?

      Yes, you maybe right about the dream. Last night, I had another dream, this time about my mother...I left her for a few minutes, in my dream, and when I came back, she was gone! I didn't know what had happened to her and was trying to find her when I woke up! It was an unsettling dream. My mother's death anniversary is coming up, next month - I had left her to go to work, in the morning, and then, I got an urgent phone call from a paramedic asking me to come home; she had already passed away.

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  5. I found this post fascinating. I am relatively new to budgets *blush* so at my age, I regretfully say that I am still a newbie. I have a lot to learn, so I like to hear how other people budget so that I can compare my spending against someone else.

    Unfortunately, I am not debt free. I am one of those "pension cheque to pension cheque" kind of people. I have a mortgage and I have debt repayments (nothing you want after you are retired), but those are the facts. I still manage to squirrel away a tiny amount into savings; but truthfully, if I didn't have something put away, I would not have anything in which to pay those "surprise expenses" that you have mentioned.

    I will try to post an analysis of my budget later this week. I received some terrible family news yesterday, so I have not accomplished anything here except to be outside shoveling snow the last two days.

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    1. (((HUGS))) Susan. You have so much to deal with.

      It's "better late than never", when it comes to budgeting. If you have fixed expenses such as a mortgage and debt repayment, then, definitely pay those, first, even if that leaves you with very little discretionary funds for other things. Scrutinize every expense to see if you can cut back or eliminate it or put it off for another day. Also, maybe consider some ways in which to increase your income? Can you sell more of those beautiful cards you make? Or your embroidered items? Perhaps set up an Etsy shop for them? I wouldn't know how to do that, but, perhaps, your son or daughter can help with it? You have been very resourceful up to now; I'm sure you will continue to be resourceful.

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  6. Once I tried spending only 50% of my take home income. It worked, but I thought counting every penny was a bit stressful. So now I have a somewhat relaxed budget, ~ 55-60% of take home income. I still track all expenses. So, if one category goes above the set amount, I can cut back next month.

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    1. 50% is hard to manage, isn't it? Especially if there is a mortgage to pay. I think you are doing really well if you can manage on 55-60%, Nil. Well done!

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  7. I remember young days when I made a point of saving a certain amount each week even if I had to eat more frugally (I invented a dish using a can of pilchards and some rice one day). When I married, I was working and my salary went straight into savings and we lived on what DH made, which was very little the first year and sometimes late being paid! But over the years we managed carefully and kept out of debt. I don't keep a detailed budget, but I do watch what I spend and work on a "swings and roundabouts" system for groceries. If I can get tasty meals out of cheap cuts of meat with the crock pot, then I can splurge on some lamb which is dearer. I think most of us like to keep up with the "specials", too, particularly where produce is concerned.

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    1. I'm sure you've managed quite well over the years, Bushlady. I think we've all made some interesting meals, when we've had to! I like that idea of making a less costly meal one day in order to be able to splurge on something another day. :)

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  8. Hi Bless
    I keep meaning to comment on this post and now finally I am doing so - better late then never!
    As a retired bookkeeper I really enjoyed your post. I really appreciate all of the detail you provided.
    I am a budgeter too - I always have been.
    I don't have as many refined categories as you but I do budget and save for all known bills whether they are monthly or quarterly or yearly.
    Anyway, even though this is an older post I didn't want to forget to respond.
    Thanks,
    Debra
    p.s. I started a crochet christmas afghan after seeing & liking yours when you posted some pictures during the holidays

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    1. Hi Debra, thank you for commenting on this post! Definitely better late than never! :D I had an introduction to bookkeeping, once, as part of a secretarial course I took, when I was 17. Later, I worked as an accounts payable clerk at a company for about 2 years! Much later, in another job, I administered a $20 million budget and accounted for it, down to the penny! I always say that I am a closet bean counter! LOL!

      I like knowing where my money is going, how much I spend on what, etc. I don't like to say, at the end of the month, that I didn't know what happened to my money!

      Yay, you liked my Christmas afghan! I started making it as a gift for my half-sister, but, my mother liked it so much, that I gave it to my mother, instead. :)

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