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.
Ideal Budget
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.
Pretty cool exercise. I might do the same, just to see what the results would be.
31% wiggle room is pretty healthy, too! Way to go.
Thank you! It’s certainly a lot healthier than a couple of years ago! I’d be interested to see your percentages, too!
Pretty cool idea! I know myself I just need to get tighter with my budget overall. I’ve completely failed this month on an epic level. 🙁
I’ve found that the more I work, the harder it is to stick to my budget. I buy things I know I shouldn’t out of convenience more than anything else. When time is tight, we’ll pay for the things we don’t want to/don’t have time to do ourselves. So chalk it up to the crazy workload this month! Next will be better. 🙂
This year one of my goals was to max out my IRA. Now that half of the year is gone I am not sure I will be able to do it. I have never created multiple budgets, but if I was to do it now, the second budget I would create is a plan to meet my IRA goal.
This was my first time, too, Petrish! That’s a noteworthy goal, and if it doesn’t happen in 2015, at least go out trying, right? It’s always better to set the goal and not quite reach it than to not set it and not save at all.
What a neat idea. I think I’m going to try it out.
I’m interested to see all these numbers! Feels like a safe way to do it without revealing too much, but a way to measure progress, too.
Fantastic idea! My husband and I will have to do this on our next finance date.
You have finance dates! That’s awesome! I hope this makes for a fun one!
Femme + Tre = INSPIRATIONAL ! 🙂
I think I’m going to give this a go myself! Congrats on the great progress, Femme! Onward and upward! 🙂
Mostly Tre! And you should totally do it. It was pretty darn enlightening. On and up indeed!
That’s pretty brilliant. I guess I did something similar by figuring out an emergency budget if things went to hell. But it could be more detailed, as could our ideal budget.
Super smart! I could add a bit more detail to my own, too, I suppose.
I need to do this. I hindsight budget and it gets things done and makes sure we are not overspending but not the best to optimize things. The bare bones number is also good to know so that you can be prepared for those unexpected stuff hits the fan moments. Stuff happens.
Stuff happens, indeed. This was a great idea on Tre’s part. Hope it helps!
Cool idea. You get the encouragement of knowing that you’re surpassing your bare bones budget while at the same time having a direction for that extra 31%. I love it when people learn to live frugally, and then their income goes up – and they STILL live frugally. I wish you well in reaching your ideal budget.
The way I see it, there’s no point in more income if we’re still going to be broke. :p So we try to be as responsible with everything as we can!
Great exercise. I’ll have to do it, too. And great reminder that these things take time and discipline. Sometimes I get so impatient with myself. I know I’m on a good track, just have to keep at it.
Oh, man, the patience factor. Frustration and depression are such a real thing when things take a long time to achieve. Especially things like money matters. You’re rocking your career stuff, though! We’ll make it together!
Thanks for trying it out & mentioning my post!
We are rocking our budget right now, but the first time we did that exercise we didn’t even earn enough to meet our bare bones budget. You are in a much better now than we were 🙂
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