I read a lot of personal finance blogs. It’s a hazard of writing one myself, but it’s one that I absolutely love. I learn so much about how other people manage their finances, and things that do and don’t work.
A couple of weeks ago, Tre wrote a post about creating multiple budgets. Doing so allows you to be ready should the financial winds change. When things go up, you’re ready to allocate your resources responsibly, and when things go down you’ve already prioritized the living daylights out of things so you don’t have to stress about what will be cut next.
She shared two budgets; one was her family’s ideal, and the other was a bare bones necessity budget. I thought it would be fun to run the same budgets for us, and see where we fell. Go see where she fell, too, because we landed in two completely different places.
Here are the things she included in her ideal budget, with an addition or two of my own made in red:
- maxing out our IRAs every year
- contributing to an emergency fund monthly
- setting aside cash monthly for annual expenses
- saving money for travel every month
- contributing a healthy chunk to our house fund every month
Aaaannnddd we’re not doing amazing. Funny story: the first time I ran the numbers I calculated for my own IRA contributions, but not for the husband. I guess the fact that he doesn’t currently have one made my brain skip over it. The numbers were bad even without it. But they got worse when I added it in. Ha?
We’re currently making only 62% of what we’d need to live this ideal kind of lifestyle.
I swear it’s not all grim, though:
Bare Bones Budget
- no money for cable (though we already do this)
- no savings for travel
- no monthly additions to the emergency fund
- no dining out
- no contributions to that house fund
Want to hear something amazing? We’re actually rocking this one! We make 31% more than we need.
If I had ran this when I first started the blog, it wouldn’t have been the same story. And that’s where the happy comes into this post. Since then, we’ve cut cable (well, kind of; it would actually be more expensive not to have it,) built an emergency fund, and, most importantly, dramatically increased our income. That income makes all of these other things possible.
What do we do with that leftover 31%? A lot of the things on the ideal list. I contribute to a retirement fund. We have a healthy emergency fund. We’re saving for a home. We have some travel savings. Are all of the numbers where I’d like them to be right now? Absolutely not.
But they’re a heck of a lot better than they were a few years ago. I fully believe that they’re only going to get better. It’s not easy getting to your ideal life, but with some persistence and hard work, it is possible.
And now, thanks to Tre, we have a hard plan for when we get there, rather than figuring it all out after we’ve arrived.