Ok, maybe the title of this post is misleading. Or, maybe not. I’m not really broke, but I do squeeze myself thin every month. I was playing around with Microsoft Excel and figured that I’d show you guys how I divide my monthly income. The following chart consists of all my sources of personal income (not including my measly business income earnings) and where my money goes.
I didn’t show the dollar amounts for privacy reasons. The percentages shown should get my point across.
My background is in Engineering so, don’t mind the fact that I’m super pumped at that beautiful looking pie chart.
The chart is representative of how I spend or transfer my money, per month. I have been following this guidance this entire year.
Take note that I save more money than I pay in bills. Hence, why I am always broke. I try to make it a point to not touch my savings. I have a kid to put through college…eventually, and a future debt-free retirement on the horizon. In retirement, I want my ”Monthly Bills” portion of the pie chart to be less than 5%. So, thing that would make me touch this amount is another rental property purchase that would have to have a suffucient amount of equity in it.
Where I run into problems
The 20% distribution of discretionary spending is where I run into problems. I have all my spending coming out of this: travel, gifting/charity, fuel, groceries, entertainment, [you name it], etc. Therefore, this is what I must get under control. Right now, I look into my spending account, see if the money is available, or will be available before my credit card bill has to be paid, and then spend. This must stop.
Here is how I am projecting to breakdown my 20% distribution of discreationary spending, starting this month, once I get my credit card paid off in full.
Things of note:
Travel is my biggest budget item because it includes vacations and going to visit friends and family.
Grocery/Household is different from Household Expenses. Household Expenses will include money that I’ll set aside for tools and upgrades, such as ceiling fans, lighting fixtures, paint, etc.
Business Expenses is money that I need to transfer into my business account, which earns almost $0 monthly. Since I started my business last year, (producing my personal finance book, buying various domain names, advertising, attending conferences, and now an app that I’m working on) I’ve run it into a deficit by almost $5,000.
I can’t continue to let the expense of school clothes creep up on me. I have to put money aside for the changes in seasons so that I’m not looking for the money when it’s not there.
My entertainment is broken up so I can monitor more closely how I spend. What can I say, I love my beer and wine, so I must budget for this. dining out usually consist of random days where I’m too lazy to cook so my son and I would out to either Wendy’s or Chick-fil-A. Rarely do I go to sit-in restaurants. Too expensive for me.
Last, entertainment: events will cover sporting events and attire, and random outings on the weekends.
Luckily, Quicken makes tracking these 10, and only 10, categories pretty easy. I guess I’ll see, huh?
What do you think of this projected budget? Is is realistic? Either way, though, I don’t want my total discretionary spending percentage of my overall budget to change, only the subcategories of it.
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DisclaimerThe opinions expressed on this blog are mine and represent my views only. I have very strong opinions, but am also an open-minded individual. If you refute my view with supported, educated and well-argued points, I could very well change my opinion.