Here we are with the third installment of our monthly budgeting example. For the November budget example, we will review what was actually spent in October and apply it to the next budget. In this budget review, we will take a look at the effects of overspending or unexpected hits to the budget.
November Budget Example Review
Unfortunately, last month there were some financial missteps as well as unexpected costs. Partner #2 was laid off. They only brought in half of their income for the month. Additionally, $100 was spent on Christmas gifts without having a financial plan in place to cover it.
Here is a quick rundown of the highlights that happened during October:
- Salary came less than expected at $3,600.
- The Halloween party stayed on budget!
- Christmas gifts cost $100 outside the budget.
- Nothing was spent on clothing.
November Budget Example
Losing a job can be really tough. Especially when there are insufficient savings to fill the gaps in the budget. This budget just started saving so there really isn’t anything to fall back on when unexpected things come up. However, as the months continue, that savings will start to build and support some budget emergencies.
Where will the money come from to cover the $900 loss? Also, the $100 spent on Christmas?! Fortunately, Christmas is an easy fix. Since no money was spent on clothing, we will use that money to cover the gifts. Now, we need to find $900. Let’s take a look at the budget and savings accounts to round up some cash.
- $50 Entertainment
- $300 Vacation Fund
- $180 Savings & Investments
- $190 extra credit card payment (leaves $200 to cover just over the minimum)
- $130 September’s Savings Deposit (won’t be subtracted from the monthly budget since it’s already deposited into savings)
It’s good to keep some money for entertainment. Without a little fun, people can end up spending the money anyway and go into more consumer debt. As a result, the budget is more realistic and manageable.
Take a look at the November budget example with the new strategy to cover the missing income.
(The bolded items have been adjusted since last month.)
- Salary 1: $2,700
- Salary 2: $900
MONTHLY LIVING EXPENSES
- Groceries: $600
- Household Items: $50
- Clothing: $0 (cover the cost of Christmas presents bought in October)
- 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: $50 (help cover loss of income)
- Netflix/Hulu: $20
- Gym Membership: $60
- Student Loan Payment: $425
- Auto Loan Payment: $175
- Vacation Fund: $0 (help cover loss of income)
- Pet Care: $100
- Credit Card Debt Payment: $200 (smaller payment to help cover the loss of income)
- Savings & Investments: $0 (help cover loss of income)
- TOTAL: -$3,730
Then add $130 extra savings to your negative total to balance out the budget.
-$3,730 + $130= -$3,600 total expenses
Hopefully, partner #2 will have found a job by the end of the month so that December can get back on track. This setback will make it harder to save and buy Christmas presents. However, life happens! Thanksgiving costs will also have to be at a minimum. This couple is eating out with family, so no expenses there. Finally, when dealing with credit card debt, it’s very important to start extra payments as soon as possible.
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.