As I previously shared, I budget using You Need a Budget (YNAB)*, a zero-based budgeting program. I thought it might be interesting if I shared my monthly budgeting process, so let us get to it.
Since I’ve been trying to take advantage of my large deck (and my mornings), I quickly brewed some coffee this morning and enjoyed it on my deck while I worked through my June budget. With May wrapping up and summer getting into full swing, I wanted to make sure that I was budgeting enough in my “fun” categories to avoid overspending. I started by quickly jotting down upcoming events – like dinners with friends, dates and holidays and then working through my YNAB categories.
Housing. Generally, my housing costs stay the same each month, including my utilities since I signed up budget billing. However, my escrow is now self-managed and the monthly amount is “paid” into a sinking fund in my high yield checking account at SoFi since Wells Fargo made some errors calculating the correct balance last year. This way, when the relevant bills for property taxes and insurance come in, the money will already have been set aside. Otherwise, there are no changes to my usual budgeted amounts.
Food. I stocked up on chicken and other staples on Tuesday and am planning my meals around those items for June, so I am lowering my grocery budget to $150 (from $200). I also have a few dinners with friends planned for this month so I’m increasing my dining out budget to $75 (up from $50).
Health. Since I am getting re-certified as a foster parent, I need to get a physical and a TB test in June. I’ve also been feeling a little down and have been thinking about returning to counseling. Based on those upcoming expenses, I’m budgeting $125 for June, which should cover my co-pays.
Getting Around. Despite having a paid off car (yay!), I feel like I budget so much for transportation. 😒 One of my most expensive items is gas but while I’m taking a couple of trips out of town in June, $150 in gas should be enough. I’d also love to use some of my car cleaning sinking fund to get my car detailed but that is TBD.
Except gas, my transportation categories are sinking funds that I contribute to monthly to prepare for the expense. I budget the same amount each month for these categories and June should be no different.
Household Expenses. My house feels a little stale and dusty, so I’m adding $50 to my “Cleaning Service” sinking fund and will use the money sometime in June to arrange for a deep clean of my house. I’m also budgeting $300 to my durable household items category to bring that line item back up to $1,000: it dropped down in May when I purchased a replacement vacuum.
Savings. I’ll continue to save aggressively to ensure that I meet my 2019 Financial Goals, while also diligently saving for other priorities such as my niece’s college fund, a future adoption and the shenanigans of my biological family.
Fun Money. In addition to my subscriptions (Netflix, Hulu, Apple Music, Costco and Prime), I try to thoughtfully monitor how much money I am spending on “Treat Yo’ Self” lifestyle choices. This month is kind of spendy, but doesn’t run afoul of my financial priorities or values.
Since I’m dating someone, I’m budgeting $50 for a couple of tickets to a tequila tasting I think we might enjoy for a nice date night. I also have my eye on a couple of books that might not be at the library yet, so I’m budgeting $50 to my “Interests” category as well. Other than budgeting a bit more in my hair and skincare category to account for some box braids I want to get next week; everything else should stay the same as they have been since I paid off my student loans.
Giving. I committed to matching donations to a charity last month, so my charitable giving is a bit higher this month. At $200, my budget for gifts is also higher due to a nephew’s birthday and my propensity to buy my niece things she does not need. As for Christmas, I always budget between $75-$100 dollars per month so I don’t have to stress about buying presents at year end.
Once I get to the bottom of this long list in YNAB (and top up my “Taxes” sinking fund), I double check the final figures against my one-month buffer, move any “leftover” money into a carry forward category and “lock the budget” by printing a copy to .pdf and saving it in my electronic financial binder. This process allows me to see where I moved money around during the month (usually between groceries and dining out) and adjust accordingly in the future. In sum, it keeps me honest.
How about you? What is your budgeting process? How to you react to unplanned expenses when they occur?
*The link above is an affiliate link. While I don’t receive any commission if readers sign up, I do get a free month of YNAB if you sign up after the free trial.