Budgets, Part 2

A month’s worth of expenses … done! Congratulations, budding budgeteer.

Now what?

The first thing you should do is figure out which of the past 30 days’ expenses, if any, might fall within your shadow budget—once-a-year payments, a burst pipe, your cousin Becca’s no-kids destination wedding (hint hint) …

Once you back out those irregular expenses, add everything else up and compare the total to your monthly take-home income. If your expenses were less than your income …

via GIPHY

If not … oof. We’re all going to go through the same exercise of scrutinizing our spend, but there might be a bit more urgency to your examination. That said, it may not be as bad as it seems. You’re still a wonderful human being and your Net Worth could even yet be heading in the right direction.

I’m not kidding when I say we’re all going to go through the same exercise. I have a pretty good idea of my monthly budget, but that doesn’t mean I can set it and forget it … especially if I, say, quit my job. When the facts change, alas, I change. And what kinds of changes affect our budgets? Mmm, let me think … yeah—only ALL OF THEM.

Third kid? Yup. Second car? Check. Winter? *sigh* Eating less meat? Uh-huh. But not nearly enough to offset that third kid.

So, yes, even us more experienced budgeteers keep an eye on the different categories of spending and make sure our budget is right for the moment … the very fleeting moment.

Speaking of categories, now that we’ve got the monthly total for our routine, periodic expenses, the next step is organizing them into different buckets.

To start, let me suggest the following:

Housing

Utilities

Food

Sundries

Clothing

Media

Health Care

Personal Care

Transportation

Entertainment

Other Debt

Charitable Contributions

Gifts

Childcare

Some of these may not apply to you—say, clothing for nudists or childcare for … masochists—but I would say these cover most things for most people, Sundries being the catch-all category. Mortgage payment? Housing. Car payment? Transportation. Student loan payment? Other Debt. Supermarket receipt? Probably a mix of Food and Sundries. Xanax? Health Care … possibly Entertainment.

Now you know where your money goes. It’s a great feeling, isn’t it? Or appalling. Regardless, you have to get to this point before you can start changing your financial situation and making headway toward your goals. Are you happy with how you’re spending your money? Are you getting full use out of everything you buy? Does your spending reflect your values? Did everything seem “worth it” two, three, four weeks later?

A couple of weeks ago I was at a friend’s house and we were talking about how much we pay for our (identical) Internet service (if you and I ever get to be friends, we, too, will talk about these things!). More precisely, we talked about how he pays a lot less than I do. LBYM was intrigued. When I got home, I immediately got on the phone with our service provider and (nicely) demanded the same deal.

Why do I tell you this? One, everything you spend money on is worth a second look. And, two, you don’t need to go crazy. Turns out my savvy friend calls every year, threatens to cancel his service, and gets sent to the “retention” team. I was pretty sure I couldn’t bluff my way through such an exchange, being both well aware of the terrible high-speed Internet alternatives in my neighborhood and, more importantly, a lousy poker player.

So no great rate for me. But I did end up getting $10 off every month for the next year just by asking.