In my last post I wrote about how I had just completed an exercise to map out how I want my life to feel. Today I took a look at my overall budget and my variable expenditures so far in October to analyze if they were supporting my life feeling goals. The results were pretty interesting and I think they will provide some food for thought for awhile. Before I get reflective with you all, I would like to take a moment to explain our money situation.
When I met my husband, he was self-employed as a wedding photographer and I worked at United Way for Greater Austin on Financial Stability initiatives in the community. In that position, I sat in on a lot of financial education classes and it was a very immersive experience in financial literacy. We got married in 2013. In early 2014 I was pregnant and decided to take advantage of the Affordable Care Act enrollment period and work with my husband full time. So I left my 9-5 job and have been a stay-at-home mom who also helps out with the family business ever since. Because I was earning under $40k a year, and because daycare is $1,200 a month in Austin and because my husband would have to hire people to do 1099 work for him to get everything done, the math worked out for me to join him and be the in-sourced labor for all our extra photography work and childcare.
2012 to 2015 we were very busy, earning well, and spending freely. In January of 2016 it was apparent that my husband was feeling burned out. He poured a lot of himself into building his career and he is really good at it, but the focus for so many years on one occupation had taken a toll. That is when I realized that our life was not sustainable and that he needed some time for new interests to develop. To drastically decrease the pressure on earning would mean cutting our budget in half. After reflection, I decided that it would be better to live more frugally than to try to match the income we had become accustomed to. This was a great move and so many positive things have come out of freeing up our time to pursue a variety of interests.
In our line of work you can line up a wedding contract more than a year into the future or an event the week before. There is a lot of waiting and seeing and trusting to see how things unfold. I’ve worked really hard to create some boundaries in our budget between household and business expenses. When we earn money it goes into the business account and then we draw $3,500 a month to cover our living expenses. We had some money in the checking account already and we’ve allocated $500 a month towards expenses which brings our total to $4,000 a month. By the end of the year we will have gone through the surplus and will be on a month to month basis with the transfers. The rest of our earnings stay in the business account to make sure we’ve got several months of expenses sitting around. This padding is what makes us feel secure. If our financial situation is healthy at the end of the year I look at allocating money into pay-yourself-first strategies that help reduce our taxable income and increase our savings rate.
My budget has to be adaptive because it’s based on projections. For 2017 I started off with a very conservative budget. As the the Spring progressed and we were exceeding my income projections I kept my household budget almost the same but I did increase our food budget because we live in a foodie city. I increased our business expenditures by investing in a new income stream within our current business model that will hopefully be fully online by next year. This project happened to require travel which which was wonderful for our overall quality of life this past summer. I’m choosing to invest in our ability to maintain the lifestyle we love so much rather than increase our monthly household expenses when things are going well. Because I know how to budget, I feel secure knowing that we can adapt to any income situation.
Here are our Household Expenses. There are a few items that you would normally see in a budget such as internet and phone, however we pay for those with the business account. We also pay for our health insurance & dental insurance from our business account, treating them like company provided benefits.
Life Insurance Policies- $137.15
A disability policy on my husband because his profession is very physical- $100.64
Student loans- $375.41 Payoff 2021
Auto- Insurance, registration & inspection for two vehicles- $153.25
Theater Arts Pre-School one day a week for our daughter- $110
Austin American Statesman Newspaper- $25.99
Monthly average: $2359
City of Austin utility bill for trash, electric, & water- $174
Texas Gas- $26
Automobile Gasoline- $100 We don’t have a commute since we work from home. We have a lot of amenities close by. If this amount is large it’s because we’re doing frequent events further from home. So an increase in spending is typically associated with an increase in income.
Food- $750 Groceries, Pet Food (we have two large dogs) & Eating Out.
Gifts & Charity- $100
The Everything Else Category- $400 Instead of creating more categories to track, I have a bucket category for incidentals, diapers, pet medicine, repairs, etc.
Husband Discretionary Allowance- $60 money we can spend without checking in with each other!
Wife Discretionary Allowance- $60
Monthly average: $1670
There is no savings category because we we have already established an emergency savings account with a year of expenses. Towards the end of the year I will increase our savings rate in a lump sum manner utilizing funds accrued in the business account.