My 2020 Budget - What Do I See?

Let's talk about money.

Did your parents talk to you about their finances? Did you learn about it in school? Or the school of hard knocks? Do you think we talk about money or financial literacy enough to our kids and educate them enough to make responsible financial decisions?

I've pretty much always been frugal. It's a part of who I am because I grew up in a family that necessitated being financially responsible. I always thought of myself as being "pretty good" with money, even when I started making my own money. I've made plenty of mistakes and had to take out loans to go to school, but even then, I feel like I've been responsible with my money. However, I never truly had a budget. I knew that as long as I spent less money than I made, I would be okay. I lived on the edge with little in savings (essentially paycheck to paycheck), as many Americans do. Fast-forward to this year, I decided to change that to be more intentional about my money. I think 2020 is a wonderful year to take on something new. There's just something about entering a new decade that renews your energy and motivates you to do better.

So in January, I started using a friendly budgeting app to track my expenses. I wanted to become much more intentional about tracking my expenses. I need to know where my money's going, after all. We all do. When you look at a budget, what do you see? Do you see constraints? Do you wish you had more? Where can you lower your expenses to put that money elsewhere?

With any goal in mind, you should know your purpose. You should know WHY.

I told my girlfriend that I wanted to be more intentional about giving money to my church (5%) and charities (5%) for a rough total of 10% giving this year. This is a big deal for me because I didn't ever think I had "enough" money to give that much money away. But that's essentially where I wanted to start. I wasn't going to compromise on those numbers. I built my budget around that, and decided I'd take it month by month to see where the numbers land. And for the rest of my money, I want to live comfortably, but leave at least 5% for post-tax savings.

I use a zero-based budgeting system, which means every dollar has a job and is placed in a specific area. If there is any surplus, it should go into a savings account, but at the beginning of each month, you should have a rough idea of where your money will be going. I hope that my rough budget inspires you to figure out what's important to you, and pushes you to do better. After adjusting some numbers from January and February, here is my budget moving into March:

Monthly income: ~$3000 (there is some variability)

Giving

Church Fund - $150 ($1800 a year)

Charity Fund - $150 ($1800 a year)

Young Catholic Professionals - $12.50 ($150 a year)

Texas A&M University - $8.34 ($100 a year)

Housing

Mortgage/Rent - $1800

Water bill - $35

Natural gas bill - $40

Internet bill - $53

Trash Fund - $25 ($75 every 3 months)

Transportation

Gasoline - $140

Maintenance Fund - $10 ($120 a year)

Auto Insurance Fund - $67 ($804 a year for my and my mom's cars)

Food

Groceries - $80

Restaurants - $40

Personal

Clothing Fund - $20 ($240 a year)

Phone - $60

Fun Money - $20

Haircut - $10

Savings

Emergency Fund - $200 ($2400 a year)

Travel Fund - $150 ($1800 a year)

Note: these figures are after-tax numbers. I have set aside some pre-tax monies for my 401k retirement account and Health Savings Account (HSA).

So what do I see when I look at this budget? I see guidelines. I see it as an ever-evolving guide to how I should think about money and how my money is being spent. It has a purpose and it helps me be more conscious of these boundaries that I've set for myself. As it stands, I have some money in my Emergency Fund and add about $2,400 each year to that, and I spend about $34,000 a year in total (with $3600 of it going to church and charity). I am comfortable with where I'm at.

Even though the budget is purposefully imperfect and fluid, it helps me stay mentally strong when I am crossing over the boundaries of the budget. I must have the willpower to say, I'm over budget this month, so I'll do better next month but right now, I can't spend any more if I really don't have to. There will be months where I go over budget in one category, but not spend any money in a different category (clothes or restaurants, for example). There is flexibility there, but I know what I need to do for the entire month with the help of this budget.

Does everyone need a budget? No, not everybody. However, I believe the vast majority of people in this world need to think about a budget. We have to work with what we have, and be responsible about it every single day. We have to be intentional about where our money is going.

So yeah, it's a work in progress, but I promise you that it's better than nothing. I track my spending every month and know where the numbers are. The concept is simple enough, but sometimes difficult to execute. In a future post, I will talk about what that means for my Financial Independence and future retirement.

Do you have a budget? What do you see in your budget? I hope my budget makes sense and that it inspires you to start today. It doesn't need to be perfect, so what's stopping you?

Intentionally yours,

Mr. K