Welcome to the second installation of our monthly budgeting example. For the October budget example, we will review what was actually spent in September and apply it to the next budget. Let’s dig in and see how we did!
October Budget Example Review
After creating their first budget last month, it’s time to see how everything went: what unexpected costs came up, how much was under or overspent on certain categories, etc. If you are new to the series, please read the September Budget Example to become better acquainted.
Fortunately, last month there was a nice surplus of $540. This is a great way to get ahead on credit card debt, student loan payment or add to retirement. However, that surplus may be needed if the couple spent more than was in the budget.
Here is a quick rundown of the highlights that happened during September:
- Salary came in as expected at $4,500.
- Groceries cost $625 instead of $500.
- Clothing cost $160 instead of $100.
- Pet care only cost $80.
And here is what needs to happen to balance some of those items:
- Take $125 from the savings surplus to cover the groceries.
- Take another $60 from the savings surplus to cover the extra clothing costs.
- Leave the extra $20 that you did not spend in pet care to cover any future costs that exceed the normal budget. Keep this category as a rollover fund. Similarly, auto maintenance and clothing could also be used like this.
October Budget Example
Since groceries seemed too low, let’s increase the grocery budget by $100. Maybe they are foodies and love to cook! Clothing was another expense that cost more than expected. However, let’s try and keep that budget to $100 and see if there is a trend to spend more or if this month was a bit off.
They also want to save for their vacation quicker. So some of the surplus from last time will go towards vacation and their credit card payment! Instead of saving for just the vacation, they want to knock out debt faster. This will free up more cash for their travels as well.
It’s also important to consider expenses for the upcoming month. Halloween usually takes a bit of money for the costumes, decorations and candy. This couple wants to throw a little party. Let’s see what the budget will be.
(The bolded items have been adjusted since last month.)
- Salary 1: $2,700
- Salary 2: $1,800
MONTHLY LIVING EXPENSES
- Groceries: $600- $50 for Halloween Party= $550
- Household Items: $40
- Clothing: $100
- Cellphones (2 phones): $100
- Internet & Cable: $125
- Rent: $1,100
- Electric: $90
- Gas: $50
- Trash: $10
- Auto Maintenance: $40
- Auto Insurance (2 cars): $175
- Health & Dental Insurance: $350
- Renter’s Insurance: $10
- Entertainment: $100- $50 for Halloween Party= $50
- Netflix/Hulu: $20
- Gym Membership: $60
- Student Loan Payment: $425
- Auto Loan Payment: $175
- Vacation Fund: $300
- Pet Care: $100
- Credit Card Debt Payment: $390
- Savings & Investments: $180
- Halloween Party: $100
- TOTAL: -$4,500
The Halloween money will have to come from the groceries and entertainment categories. This way, money can continue to go towards eliminating credit card debt and savings. The budget now allocates every dollar and even includes a Halloween party budget of $100.
For more insight and help on managing your finances, speak with a certified counselor at American Consumer Credit Counseling today by calling 800-769-3571.