February is Budget Month

The title of this post is a little deceptive. Every month is budget month because I try and stick t my budget every month. February is merely the month I am going to tell you about my budget in the most detail. When I think of a budget I like to think of it in two categories: fixed and variable. In the fixed category are my fixed income from work and my fixed expenses like rent and savings. In my variably categories are things like extra income from side jobs and extra expenses like gifts, or extra savings. I like to budget each category separately. Fixed expenses get paid with fixed income and a fixed amount goes to savings, without deviation if at all possible. When I know how much variable income I have (after it has been deposited in my bank account and not a moment before) I plan on how to spend it. Sometimes it gets used to boost savings, sometimes it goes for something more exciting like a trip.

How did I formulate this budget? Well, for starters my husband and I budget our money separately. I know this sounds bizarre but it is not like we withhold cash from each other. It just means that we each handle different parts of the budget. Large purchases are discussed by both parties. Our bank accounts are joint but we each manage a different account. We each pay half the rent etc. It gives us both a little latitutde in our spending without having to police the other party. We share the same attitudes about spending so this works well for us. It may not work for others.

The best way to formulate your budget is to spend a month or two writing down every thing you spend. This will help you get a feel for where your money is going, where you need to rein in and what you ned to plan for.

For singles who are about to get married or start living on their own, I seriously suggest siting down with both your parents and a friend who has been married for a while to hear about their budgets. The budget of a large family, in which the parents each have an established job is obviously going to differ from that of a yong couple that are both students. But hearing about the expenses of others can help you get a handle on what things you will have to pay for. I once sat down with a young couple making their budget. They had everything planned out. Except that they forgot to include health insurance, auto insurance, and utilities. Some budget huh? Sitting down with someone who has been living on their own can help you realize all the expenses you don't realize your parents are paying for you.

Here's a peek at my "fixed" monthly budget:

Income: 2,430
Tax - 238
Charity (religious obligation) - 200
Rent- 882
Utilities - included in rent
Health Insurance - paid by graduate school
Food - 300$ (this will be discussed at length in another post. I usually do not spend this much, but it is in there in case I need to).
Transportation - 40 $ (metro card)
Laundry - 12$
Drug store/Dr. co-pays - 60
Internet - Paid for by Graduate School
Savings- 500
Miscellaneous/leftover -  198. I try and put most of miscellaneous in savings too. But it is there so that I do not feel bad for having a lot of company for dinner/going on vacation/giving a wedding gift etc. When it pops up. That's what this money is for.

If you have debt paying it down should also be a line item in your budget. Obviously some months the categories need adjusting and you can shift money from to another but this gives you an idea of where your money is going and how you want to portion it out. You may need to have a car. That involves a large expense that I do not have - insurance, lease payments , gas.

Stay tuned for more on my variable budget, my food budget and great ways to track your spending online.