Is your budget really as smart as you think it is? One of the first things many people do when they are trying to get their financial fitness on is to create a budget. Undeniably, there is a requisite amount of trial and error involved in the first few passes. A budget should meet everyone’s needs, be grounded in reality, and align with your goals, values, and charitable priorities. Flexibility is key. For a long time, I was pretty pleased with our budget. After all, it allows us to save 42% of our after-tax income without factoring in any side hustle money. And that doesn’t even include the 10% of our pre-tax income that we each pay towards our respective pension plans every year. Clap louder. I can’t hear you this far away.
While it seems like we’re sitting pretty with our line items each month, it turns out that the true test of a budget involves the magic number twelve. That’s right. Yearly budgets lend an equally powerful perspective. Even if you already have your budget broken into percentages, the yearly totals either get a little harder to swallow when you think of what else you could be doing with some of that money, or the numbers will inspire you to take a victory lap around the kitchen table. I put our budget up to the test and multiplied every line item by 12. Below, I share just a snapshot of the good, the pricey, and the ridiculous:
Groceries – $200 or $2400/year
Yes, this includes alcohol. No, I don’t drink nearly as much as my Twitter account might lead you to believe. There’s something about a glass of Aldi Riesling that just needs to be tweeted! This amount also includes paper goods, like facial tissue (no moist Kleenex in this house!) and paper towels. Because we’re trying hard to be a bit more eco-friendly and because the couponer in me still hasn’t totally disappeared, I’m pretty good at stockpiling toilet paper and using paper towels sparingly. As for groceries, we’re still eating healthfully. Having an Aldi and several ethnic grocers nearby is a huge help. I’m totally proud to say I can feed two people on less than $2500 a year, especially given the fact that Mr. P has six stomachs AND a hollow leg.
Cable & Internet – $106 or $1272/year
Alright, I’ll hand over my personal finance blogging card now. I put cable in the good column! While it would be even better if it was nonexistent, this amount is the bundled cost of our cable and Internet since I whittled away the channels
when Mr. P wasn’t looking Comcast raised the rates. It could be better, but it was also significantly worse. Plus, the internet keeps me connected to the personal finance blogosphere and all of your brilliance. So it’s a small price to pay, really.
Mortage – $960 or $11520/year
Most days, I hate our mortgage. I started hating it a lot more when I realized it was debt. But there are other times when I think about how close my home gets me to both sets of parents, our jobs, and nature. Then, I think it’s not so bad. In fact, because we deliberately chose to purchase a lot less of a house than what we were approved for and encouraged to buy, this number could be a whole lot worse. Still, I hope to slay the beast sooner rather than later. Who wouldn’t want almost an extra $12000 a year?
Property Taxes – $650 or $7800/year
This is a wild guess that has been surprisingly accurate aside from one heart-stopper of a bill. Our first full year as homeowners led to us getting absolutely hammered with a property tax increase. What I thought was going to be a huge battle was actually resolved with two phone calls and a copy of our house’s listing sheet and contract. Since then, the home values in our neighborhood have continued to rise, so I’m sure we’ll get hit again soon. Until then, I simply add an extra $50 a month to last year’s bill and hope to come in close.
Cell Phones – $80 each or $1920/year
If Bell* only knew what he started. We have unlimited talk, text, and data, but that is only because we’ve re-upped our contract so many times that they essentially grandfathered in a now-extinct plan. We are both currently locked into two-year contracts (thanks, Sprint!) that have about ten months to go. I have no idea what we will do after that. Part of me is really interested in investigating options like Republic Wireless, Google Fi, or even Cricket. But part of me also knows that we use a lot of our data on weekends when we visit my parents at their cottage up North. Sometimes, I even blog from my phone! Maybe I do need the newer iPhone with the bigger screen. I kid, I kid. All I know is that the only way I can really make this present number palatable is to list each phone separately on our budget as two different $80 line items. $160 a month seems like too much. $1920 a year is mind-numbingly absurd.
*Or Meucci or any of the other people who may have invented my iPhone’s ancestor.
So Tell Me…How do your expenses look when you consider the scope of the year? What should we do with our phones?