Having an accountant for a father means that talking about money isn’t taboo – I have never understood why is makes people so uncomfortable. You probably feel like you have lots of money, exactly what you need, or not enough; there is no reason to be ashamed for being a member of any of those groups. Depending on your education level, family situation, job availability and many more factors you may be limited at the job choices/opportunities which are available to you. BUT something that people have 100% control over is how they choose to spend their income. Anyone can be irresponsible with money.
Jake would probably describe me as a money hoarder or bean counter; I check all of our accounts daily (using Mint) to make sure we are staying on top of our budget. This behavior probably startedwhen I was in middle school and my parents needed me to watch my grandma after school for an hour or two until my mom got home. My grandma had Alzheimer’s and moved in with us when I was 8. She attended adult day care every day and the bus dropped her off just a little bit after I got home from school. Professional nursing care was very expensive and it just made more sense for me to help her off the bus and watch her for an hour or so until my mom was home. I earned about $100 a week from this job and kept track of my earnings in my school planner. My parents would then transfer the money to by bank account and I just watched it grow…
In high school I started working as a cashier at a local health food store and my savings habits continued. I worked as a computer tech in college (our version of Geek Squad) and as a TA in the computer science department.
By the time I met Jake I had already saved a nice amount of money saved (this enabled me to pay for our wedding on my own) and with him going to the Naval Academy neither of us brought school debt into our marriage.
But now that we were adults we had to come up with a monthly budget that would work for us and for our income. When both of us were working it was a little bit easier since we had lots of wiggle room but not that we are living on one income with a child it has gotten a little more challenging to living within our budget while meeting our savings goals.
Here’s our budget (it won’t work for everyone since we all have different interests and priorities) but using Mint was a huge help in organizing and tracking our monthly spending!
I’m not putting in exact numbers, just our percentages of our take home pay every month (housing is not included since our entire housing allowance goes to military housing – and this number changes depending on where you live; $1900 in Groton vs $3300 in Cambridge). I didn’t include our mortgage payment to our CT home or rental income since we break even.
- Retirement (28%) – We put a LOT of money into retirement every month. Jake is able to automatically have a certain percentage of his base pay go to his Thrift Savings Plan (TSP). He has been doing this since before we were married so it was really easy to continue since we are just used to not having this money…years from now we will be very happy with this decision!
- Offerings (16%) – We give offerings at church and donate some money back to our colleges each year. During the month that we moved we used our budgeted donations to give money to a WELS operated orphanage in India. This is a budget that we will always work to have but it’s comforting knowing that in an emergency we could easily reduce it.
- Food (12%) – This includes both groceries and eating out.
- Cars (10%) – We have one very small car payment each month with less than 2 years left (for our CR-V). This budget also includes gas, repairs, etc.
- Savings (6%) – I wasn’t really sure what to label this category. We put away some money every month for different goals: travel, 5 year anniversary, and spending $$ for each of us. This is how Jake can buy nice tools and I can buy nice purses! This is where we implement the idea of “paying yourself first” but what’s nice is that we can let that money build up for months at a time. Then when I see that Burberry purse I love or Jake wants to buy a fairly expensive table saw we don’t have to consult each other. We call it the “whatever I want” fund because we are not allowed to criticize each other on how the money is spent. This is another category that we could easy reduce in a money crunch.
- Shopping (6%) – Self explanatory….basically all of those trips to Target, the thrift store, and the mall!
- Home (6%) – This budget is for furnishing the house, paint, small tools, and project materials.
- Noah (6%) – Noah’s budget covers his college savings, clothing, food, and toys.
- Bills (7%) – We don’t have to pay for utilities since we are in base housing. Our only bills are our cell phone, internet, Hulu, and Netflix. When we first lived together we decided to wait until we really wanted cable TV to get it … and we never got it!
- Slush fund (3%) – This is overflow for random expenses during the month that can’t quite it into a category.
The more important numbers to look at are what we NEED vs. what we LIKE to spend money on. We only NEED food, cars, half of shopping/home for household goods, Noah’s monthly expenses, bills, and slush fund. We WANT to save for retirement or Noah’s college education, give offerings, save for vacations (and purses and tools!), and go shopping on a regular basis. So let’s take a look at that chart…
NOTE: I started this post before the government shutdown became a real concern. The shutdown (while it shouldn’t have happened in the first place) shows that budgeting is extremely important for many Americans. On top of our regular savings each month we have an emergency fund that could last us approximately 6 months (depending on where we are living). We could use this to buy a car if one dies, repair something catastrophic on our CT house, or to live off of if Jake was not working (an unlikely scenario but you never know!).
Letters to Jake 