Typically it is around the middle of December when I start looking at my budget for the next year. By then, I’ve got 11 months of spending under my belt and I have a pretty good idea of what my spend has been. From that, I hope to be able to predict my spending for the following year.
I start off with a short review of the current years financial goals vs. where its looks like I will end up. In this case, while my investments have not done that well (thank you market), I still was able to save over 50% of my salary – the first time I’ve ever done that much! In addition, we remain debt free, and I am 12 months closer to FI. We did dip into our savings account somewhat this year, due to some medical bills (sucks to get into your mid-50s), so our savings account isn’t where I believe it should be.
From there, I try and set my budgetary goals for 2019
- Continue to budget to have excess funds for the year (i.e. don’t depend on debt)
- Put away more for medical (got caught short this year)
- Continue to try and keep my savings rate in the mid-to-high 40% range
- Continue to fully fund Charitable spending at the rate I did last year ($400/month)
With that in mind, here is a comparison of my monthly spend for 2018, and my budget for 2019.
|Revenue||Base 2018 Month||Jan-19|
You will notice a significant chunk of funds being leftover at the end of the month. This is a little misleading, as I get paid every 2 weeks, so every 6 months, I get an extra paycheck. Thus, on a real monthly basis, I’ll be a little in the black until that 6th month. My intention is to dump that extra paycheck into savings to get it back where is used to be.
You’ll also notice that my take home pay actually went down about $100/month. That is because I didn’t take enough out in taxes and didn’t realize it until over halfway through 2018. I’ve corrected it, but the result is $100 less a month in income.
I also have a personal account which I pay myself $1100/month. I use this for paying for my lunch & travel food, gas, hobbies. Etc. I follow the same method to do that one, and plan on coming in each month “in the black”.
Some of the categories may seem outside the norm for FI people (groceries, dining out,etc.) but we intend to live some of life for now. Also, you can see that property taxes are pretty expensive in NJ – and my $6K a year is actually quite low for the state (its typically 2-3 times that).
With this in line, I can now go to my banks and investment sites and set up automatic transfers. I typically track my budget monthly, and make adjustments every 3-6 months, based on how I am doing.
Other articles on budgeting
What are you doing to plan for 2019?
Mr. 39 Months