September 11th, 2008
Are You Living or Dying on a Budget? I am such a simple person. Unless something interests me I really don’t like putting much effort into it. My household budget is defiantly something that doesn’t interest me and although I spent more time than I would like focusing on it, I don’t put a lot of effort into determining it. I follow a basic 60 – 40 principle. Yep I’m that simple. OK it is a bit more complex but I am going to make it simple.
- 60% of NET earnings go toward Housing and bills (30% housing and 30% bills) – you know the roof over our head
- 30% of NET earnings go toward Household Living – food in our belly, the occasional 12 pack of coke, and soap to wash off the dirt my kids collect
- 10% of NET earnings go toward Savings (5% short term and 5% long term) – this really doesn’t apply to me because I can’t save a dime, if money is there and the bills have been paid my philosophy is spend it!! On occasion I have been known to spend it even when the bills have not been paid just to irritate my husband and comfort myself.
Now that’s simple! Let me give an example:
Total Monthly Net Income $2,000:
60% or $1200 towards housing and bills – 30% or $600 towards household living – 10% or $200 towards savings
Now let me break it down a bit more by category:
Housing and Bills (60% of NET income):
30% would go towards mortgage/rent payment and home insurance and taxes. 30% would go towards all the other bills like car payment (none here we believe in torturing our children with the ugliest cars purchased in full at the cheapest price just to watch them dive to the floorboard whenever we drive by someone they know), utilities, phone, credit card, loans, health insurance etc.
Household Living (30% of NET income):
This area covers food, toiletries, kids allowance (we often borrow against this with high interest rate with a long term repayment plan), auto-fuel (only because my husband refuses to ride his bike the 20 miles each day to work which I do not understand why because he did it when he was a small boy, in the snow, 100 below, uphill both ways). MEN!! And anything else we feel is a necessity in our life (trips to Vegas to gamble do not fall into this category).
Savings (10% of NET income):
5% would go towards short term – like car breakdowns, an unexpected trip to the ER twice in 1 week, new couch from the thrift store because the red punch stain just won’t come out or a small shopping spree on chocolate and beef jerky because mom has had a real bad day! (This expense pops up a lot in my household).
5% would go towards long term – like the 5 weddings we really should be saving for, college education that my older children refuse to use just to spite me or the purchase of a bus as our van isn’t big enough to car-pull my children and all their friends around because they believe that is my only job in this world and of course charitable donations such as our banks nsf fee’s. We seem to contribute more than 5% at times but as long as we are doing our part in bettering the banking industry I sleep better at night knowing I give to such a good cause.
For a complete breakdown of the expenses in each category check out http://www.homemoneyhelp.com/BudgetformN.html. This is a free printable form to help get you started. This site also has great information and additional forms to help taking your budgeting to the next level. There are a lot of sites and articles out there for home budgeting if you are looking for a more advanced technique than mine. Check my links page for additional resources.
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