Okay, so you can’t really BREAK YOUR BUDGET: On Savings, yet with how the year is going so far, it seemed appropriate. Whether the savings is for retirement, time off, or a big purchase, it is always nice to have a little extra in the bank.
On Preparedness
In our marriage, I tend to be the under-prepared one, while Katie leans towards over-prepared.
This has been evident in the past in occasions like packing for trips, purchasing baby items, or even just planning a family outing for an afternoon. In fact, on the day our daughter was born – a month before she was due – I was the reason the car seat was not installed in the car. Katie was the reason we owned a car seat at all!
On Emergency Saving
Because I do most of the family finances, spreadsheets, and such, I have kept our emergency fund pretty under-funded as is my personality. I would not always advise that for others; however, I was never worried. I had a system and some back up plans if anything crazy ever happened.
For the longest time this was how I operated. I liked the efficiency of funds coming into the checking / savings account throughout the month and heading out like clockwork when automatic payments came out, with a nice buffer in case of any unexpected higher bills (see Mr. Money Mustache’s opinion on this).
Now, my attitude is changed a little bit. While the world seems so volatile, we decided it is a good time to be a little extra prepared. When there is increased variability, it seemed like a good time to bump up the emergency cushion.
On Emergency Budgeting
Some would call emergency budgeting a crisis budget.
What is your baseline? If you only needed to pay for your housing, food, and typical bills with no frills; what would that look like?
I think that this is a good number to be aware of and to know before your “crisis” hits.
What would be the first things to go? In what order?
The Budget Breakdown
For the purposes of simplifying our lives, there are several areas of our finances that are set and then left alone each month: bills, giving, and saving. All of these things happen without me seeing them at all, so they are typically out of mind outside of the curious check into how much our electricity or gas cost last month.
With most of our saving automated and coming right out of the paycheck, this is an area that rarely gets touched, and I don’t necessarily “budget” for saving. It is just the number at the end of the spreadsheet labeled Balance = Actual Income – Actual Expenses.
Original Monthly Savings Budget
401k – Company match, plus some
HSA – $591 (max this out if available! Also, some of this will be used for bills, but I’ll call it savings)
Left overs – The Balance, or whatever was not spent in our budget that month
The goal of the Balance is for it to be positive, but close to zero if we planned well. A zero would mean all of the money that we planned to go out went out – no surprises, positive or negative.
Broken Savings Budget April 2020
401k and HSA and normal left-overs – No changes
Extra left over from implementing Emergency Budget – $1,326
2020 Roth IRA – $1200
Rest of stimulus unused towards our Dream Home Fund – $1200
TOTAL APRIL SAVINGS – Increased $3,726
Most of this is thanks to the IRS and being lucky to still be working because sadly, a good portion of the country is off of work right now.
Crisis Budget
What stayed and what had to go?
What Stayed?
Of course we had to pay our rent, utilities, and food.
What Went?
This month’s spending was pretty similar to average months except for these areas.
- Travel – typically about $230 / month averaged out, but no traveling for a bit now
- Date Night – Katie and I agreed to save what we would normally spend to treat ourselves and get a frozen pizza and ice cream for a treat instead!
- Dining Out / Alcohol / Coffees – no eating out, home cooking, but restaurant quality!
- Clothing – delaying any new clothing purchases, were not really going anywhere so I’m in my sweats most days anyways
- Misc Baby Items – Baby Flame was all set with essentials this month 🙂 and was happy with her current line-up of toys
- Non-essential Toiletries – fancy conditioners, lotions, other stuff, we were all set and I stuck to my bar soap
- Home Maintenance – we rent but sometimes we fix little things around the house, but the little problems can often wait
- Vehicle Maintenance – driving less, my car needs some repairs, but those can wait one more month at least too
The average of our January, February, and March spending was $4,312 / month. In April 2020, we spent $2,986 (not including medical or taxes that come out of the paycheck). This left a balance of $1,326 of wiggle room that we could put towards the future by increasing our emergency fund a bit and saving towards a down payment.
Stimulus Check
In the midst of the COVID-19 pandemic, the government enacted the largest stimulus package in history. This was a first in my lifetime. We are fortunate to not be in desperate need of this at the moment, but I imagine many families and individuals greatly appreciated having a little extra whether it went straight to the grocery bill or saved them from dipping into their emergency funds.
Mend Your Budget?
As I mentioned, BREAK YOUR BUDGET started with the intention of detachment. While being joyfully frugal, we planned to splurge in areas where we find value.
This month was the opposite. Even though we still found areas to spend, and we didn’t go full “crisis mode”, we definitely didn’t break anything. Maybe we mended it?
It was good for us to be aware of what expenses can wait and which ones are needed in order to run a happy and healthy household.
Preparing is Essential to BREAK YOUR BUDGET
As I have mentioned, you need to know your budget in order to be intentional about breaking it in areas where the extra expense will bring joy to you and others.
Every budget should have wiggle room. Spend what you already have or less – preferably much less. Then save the difference. The larger that difference is, the more you will be able to break that budget in the future, even in the midst of a crisis.
