Budget Help

[sdearborn]

My husband and I make around 110k, have three kids, a tiny car loan ($60 mo) and about a $1600 mortgage including tax and insurance. We have no other debt.

We are looking for ideas as to what the average family in our situation budgets each month for groceries, eating out, travel and gifts. We do ok but are only saving 10% for retirement and barely anything for college.

Any help is appreciated!!

Sue

[disneysteve]

Welcome. I think you are approaching this somewhat backwards. If you are only saving 10% for retirement and not much for college, fix that first. Pay off the car, then up retirement savings to 15% and decide how much you want to put away for college. At that point, take a look at what is left and budget from that. Look at what you currently spend and see where you can cut back to fund that increased savings.

My point is that what others spend isn't necessarily helpful to you. I can tell you that we earn a little more than you, have one kid, a $1,300 mortgage payment and no other debt. We spend about $6,000/year on travel but we also save upwards of 25% of our income for retirement and other financial goals.

[maynard]

I dont have specific numbers for you, cause my situation is alot different than yours, (single, no kids, small rent payment). But i would suggest you moniter all your spending for a few months. Then you easily see what youre spending too much on, cause it usually sticks out like a sore thumb. Then do a budget and make youre spending limit for those categories something like 25% less than you have been spending. Then continue to reduce it by some percentage over the next few months.

That worked well for me. Im sure others will chime in with their budget numbers, but no two people are in the exact same situations or have the exact same needs and wants. Just something to keep in mind.

Good luck!

[snafu]

There isn't a 'one size fits all' budget as there are so many variables. A basic division is to allocate 20% to savings, 50% to needs which leaves 30% for family 'wants,' those things that make life enjoyable. If your children are teens they eat more and more often than anyone can imagine!

[jpg7n16]

My husband and I make around 110k, have three kids, a tiny car loan ($60 mo) and about a $1600 mortgage including tax and insurance. We have no other debt.

Would you be able to post a more thorough budget? Listing things like gas, groceries, eating out, entertainment, giving, etc.

We are looking for ideas as to what the average family in our situation budgets each month for groceries, eating out, travel and gifts. We do ok but are only saving 10% for retirement and barely anything for college.

If you are looking for a very general budget expectation, you can use the free program here:

Gazelle Budget Lite - daveramsey.com

Just enter your name on the 1st page - then your monthly income when the program loads. It will auto generate a very general range of expenses by topic.

And I don't agree at all with the savings % of 5-10%. That's too low. I guess you gotta start somewhere, but the majority of people need to save more than that. For instance, I think retirement should be 10-20% by itself. Saving for college, etc. would be on top of that IMO.

[sdearborn]

budget help

The following is a pretty messy copy and paste from mint. We did Dave Ramsey to get out of debt and get us up to speed on the emergency fund but have seriously lost our gazelle intensity. We keep a VERY detailed google spreadsheet of all amounts that are in savings. We are just struggling with what we can do to save more money.


The second number is the budget, the first is where we are this month to date.

Home: Mortgage & Rent
$1,640 of $1,640
Financial: 401K Contribution
$650 of $650
Gifts & Donations
$445 of $605 this is $250 gifts, $150 for school auction and $205 for charity
Food & Dining: Groceries
$400 of $600
Bills & Utilities
$404 of $475
Kids: Babysitter & Daycare
$73 of $450
Travel
$530 of $420
Kids: Kids Activities
$220 of $200
Auto & Transport: Gas & Fuel
$118 of $190
Auto & Transport: Auto Payment
$67 of $112
Home: Home Improvement
$100.22 of $100
Auto & Transport: Service & Parts
$100 of $100
Financial: Emergency Savings
$100 of $100
Shopping
$19 of $100
Food & Dining: Restaurants
$86 of $75
Financial: Life Insurance
$42 of $65
Auto & Transport: Auto Insurance
$60 of $60
Kids: Kids College
$55 of $55
Uncategorized: Blow Money
$18 of $50
Personal Care: Hair
$16 of $50
Health & Fitness: Sports
$35 of $35
Education: Tuition
$30 of $30
Entertainment: Amusement
$55 of $25
Auto & Transport: Bicycle Maintenance
$25 of $25
Business Services: Shipping
$0 of $20
Entertainment: Newspapers & Magazines
$0 of $19
Bills & Utilities: Me.com
$17.33 of $17
Entertainment: Movies & DVDs
$29 of $15
Home: Home Insurance
$12 of $12
Auto & Transport: Public Transportation
$0 of $10
Entertainment: Music
$0 of $4
Business Services: Business Expense
$282 of $0
Home: Furnishings
$0
Edit Details
Home: Home Services
-$80 of $0

[disneysteve]

Several things immediately jump out from your list - there are a number of categories where you have already overspent your budget and we are only halfway through the month. There are two possible reasons for that. One is that you just aren't adhering to the budget. The other is that the budget is incorrect and didn't accurately reflect your real expenses. What I would focus on first is categories where you are over budget on purely discretionary items like travel, gifts, restaurants, kids' activities, amusement and movies. Those are all wants, not needs. Then look at actual needs that were over and see what happened, like Business Expense. You budgeted $0 and have spent $282. What is that about?

Do your best to restructure things to fit into the 50-30-20 budget that snafu mentioned. You have a lot of discretionary stuff that could be reduced or eliminated to get you to that point.

[jpg7n16]

Ok something's not adding up. Do you guys get a really big tax refund at the end of the year?? I'm talking like $12,800??

Using the marginal rates for the year, and standard deduction for married filing jointly, giving you 3 children, and a combined income of $110k, and 401k contributions of $650/month - you should have total tax for the year of about $21,427.50 (includes FICA taxes)

From $110k (before 401k contributions - since those were included in your budge), that leaves you a budgetable: $7,381.04/month

Yet your budget only adds up to $6,309

Where is the other $1,072/month??

[sdearborn]

So looking at the budget, my husband put 401k in the budget but that is actually our IRA. Out of his paycheck are $405 for dependent care, $510 for insurance, $245 for IRA, and $320 for HSA.

Also The business expenses are all reimbursed by my husband's co at the month end. I should have deleted that out.

I think it comes down to cutting some of the kids activities, travel and gifts. We have a pretty stagnant income as my husband tries to keep a small company afloat and I work one day a week.

[disneysteve]

You and your husband need to sit down and revise the budget. It needs to be based on actual take-home pay, so anything that comes out pre-tax doesn't get included since that money is already spent.

You DO need to include reimbursable business expenses in the budget if you need to lay out the money up front. Otherwise, how would you pay those bills when they occur? It appears as if you have not been budgeting for them so that could be part of your problem. When a $282 expense comes up and no money is set aside for that, what do you do?

[snafu]

OP: congratulations on getting yourselves out of debt, that's one giant step forward. Are you adding $ 100. ea. month to your Emergency Fund? How many months are covered in the current balance? Have you had reason to use the fund in the past 12 months?

[FrugalGirl321]

We are looking for ideas as to what the average family in our situation budgets each month for groceries, eating out, travel and gifts. We do ok but are only saving 10% for retirement and barely anything for college.

Any help is appreciated!!

Sue

Sue - I'm a SAHM and my husband makes just over $100K. Like you, we have absolutely no debt other than our mortgage. We are also a family of 5, with the oldest being a teenager. Each month, we budget $600 for groceries, $20 for eating out, $250 for travel, and $40 for gifts. If we're over in a single month for a category, it comes out of our fun money. We're able to max out his 401K, max his ROTH IRA, and contribute $140/month to my IRA. Our mortgage is $1814 (PITI) so your budget is quite similar to ours. We are not saving for college because we plan to cash flow that but we are prepaying our mortgage.

Please let me know if I can help further.

[disneysteve]

We are also a family of 5

$20 for eating out

How does a family of 5 eat out for $20? I'm guessing that you guys don't actually go out to eat since it would take 3-4 months of saving just for one casual meal out.

[DebbieL]

I was thinking that too Disneysteve. I don't think $20/month would even feed 5 people at most fast food joints. They must just go out 2-3 times a year or something.

[buildmybudget]

It seems to me that this is a common problem with most budgeting programs, Mint included. Mint is flashy and categorizes your expenses but truthfully it seems it is not helping you figure out where you are headed financially, or how to equate the over/under spending you posted above to actions you can make today to save more.

For example, all your activities/entertainment/charity spending are over-budget while only a few expenses are under-budget(such as utilities). How does this effect your next month's budget or your savings goals for 2011? Obviously if this is what your normal monthly budget looks like you may need to take a hard look at the spending decisions you are making. The key to building a strong financial foundation is being able to see where you are headed so you can make better budgeting/spending decisions.