Our 2015 budget update – how did we do?

Published January 6, 2016   Posted in Budgets

As many of you know from our monthly budget update, we rely on a budget to help keep us on our goal to Financial Independence. But, budgets seem to be sore subjects. We either love them or we hate them. Take a look at how our 2015 budget worked for us.

Our 2015 Budget: How much did we save over the year?We love keeping a budget, but we approach budgeting in a slightly different way than most.

Instead of a straight monthly calculation of anticipated 30-day expenses, we calculate our anticipated spending numbers for the year and then break down those numbers into their respective amounts per month. We focus on yearly expenses because we have a number of expenditures that do not apply on a neat monthly basis, making a straight monthly-calculation a poor indicator of frugal spending.

Ultimately, this means that if we go over budget on a particular month, it’s not a big deal so long as our yearly expenditures are on target.

This also means we have to be disciplined enough throughout the year to not blow through our discretionary funds too early because if we have a few months of over-spending, we may find ourselves in the position of having very little cash left at the end of the year to use for holiday spending.

Luckily, we don’t tend to have that problem because the budget helps keep our spending to a reasonably consistent level all year long.

We don’t say, for example, “Hmm, I don’t really want to cook tonight, let’s check the budget to see if we can eat out.” Instead, we plan special lunches out a couple of weeks in advance and make sure we’re doing okay budget-wise before we actually go.

We also adjust our budget categories as we go. For instance, we managed to shave off some of Steve’s cellphone payment about half way through the year, so our yearly budget for cellphones went down as a result. An example in the wrong direction this year was our grocery budget. We started the year with a monthly budget amount of $300 and we stuck to that pretty well. However, due to food sensitivities, I completely changed my diet (and for support at home so did Steve) midyear. Let me tell you that cauliflower is expensive! We’re still trying to get our grocery budget back down to $300, but when it kept falling at $350 no matter what I tried I upped the budget amount for the year. We stay flexible and realistic.

Our 2015 budget update

This is the first full year that we’ve tracked our spending as a couple and the first year we tried to stick to a budget. How did we do?

In the Fixed Costs category we did well at 102% spent. We are over a bit on the year for what I anticipated but that is due to our home refinance.

One more month and we would have broken even on that deal.

This category is staying the same to start 2016. However, it is going to change DRASTICALLY once we start selling the houses. Thus, this category will have to be extremely flexible in 2016. You can check out my upcoming article on what we anticipate our budget to be once we hit the road full-time. I will also be writing a budget update for the months we are living in the Airstream and still working full-time.

In the Utilities and Other Necessities category we are under budget for the year at 94% spent! There are a couple of subcategories where we went over (Insurance and Car Repairs) but multiple where we stayed under, so it evened out. Again, this whole section will have to change drastically some time next year when we move into the Airstream but I plan to keep the same dollar amounts to start 2016. Except maybe Insurance. I need to figure out why that was higher than we anticipated.

I’ve already mentioned that we needed to increase our budget for Groceries this year. We are just about perfect for our yearly adjusted budget, so yay! (100% spent) This is one of the categories we need to stay on top of the most. I have great plans on how to shrink this number down even more and still maintain our gluten-free, dairy-free and mostly vegan lifestyle full of fresh veggies and fruits. My plans involve creating a capsule pantry/kitchen and I’m excited! Maybe that will have to be a future post if people are interested (*wink*).

Lastly, the Fun category. We are under for the year here too, though not by much. (98% spent) Again there are some subcategories here where we went over (Health being the main one due to the unfortunate knife incident). I’m definitely upping the Health Budget for next year. It was a total guess since I had never tracked that before. I’d rather budget on the high side so if an accident does happen we’re prepared. We’re thinking about shrinking our lumped Fun subcategory a bit more next year. This is the one place we sometimes will buy something because we have the budget for it and lowering the amount would put a stop to that. We shall see.

Overall we were under-budget for the year and I’d like to keep it that way! Since we do budget for emergencies most years we should be under budget and that’s what needs to happen, especially once we’re on the road full time. Once on the road we’ll be pulling a certain amount out of our investments to cover our living expenses. If we don’t budget for emergencies we will have to scramble if something happens to get the funds. If we do budget for emergencies then the money will slowly accumulate in our account so that when something happens we are ready. But this only works if we stay on budget everywhere else.

2015 was a great learning experience. 2016 will bring with it a HUGE amount of change. Our budget will change with it but what we’ve learned this year will help us make the best choices when we need to.

We track our net worth using Personal Capital



Comments

10 responses to “Our 2015 budget update – how did we do?”

  1. Congrats on a great 2015. Groceries budget is always a challenge for us too. With a family of five it can vary and we are trying to do a better job of avoiding food waste.

  2. Congrats staying under budget for the year! It is funny what a sore subject budgets are. We don’t use one because we’re not wired that way, but we’re certainly not anti-budget! 🙂 Instead we just don’t keep most of our income in a place that’s accessible to us, and force ourselves to live on a more restrictive amount — that’s what works for us! And in retirement, we think we’ll give ourselves a monthly “allowance” to live on, but that could change, too. Like you guys, we’re all about staying flexible. Speaking of flexible, I’m amazed that you manage to eat GF and mostly vegan for $350 a month! Groceries just must be cheaper for you guys, because we still can’t seem to get under $500. Oh well… 🙂

  3. Tawcan says:

    Congrats on a great year on keeping track of your budget and spending what you allocated. Grocery is a tricky one, especially with the increasing food price.

  4. Jack says:

    I approach budgeting in a similar way, but apply the ‘1 year of spending broken down per month’ to a more extreme 5 year moving average. That helps capture some big tickets: big car or house repair, travel, etc. When nothing changes in our lifestyle, I just add 2% (for inflation) each year to each bucket. Otherwise I adjust the category buckets as we make changes to our lifestyle. To calculate net worth, I put aside any unused budget money (virtually, in my budget/net worth spreadsheet) in the ‘passive/liabilities/provision’ column. Let say that this year I have no car repair, I’ll add the budgeted amount to the car repair provision. I then adjust budget so the provision buckets remains stable long term (5 years horizon). For instance, I had 2500$ in the ‘car repair’ bucket after a few good years with almost no repairs. This fall, I had a got a big repair on my car (2000$). So I simply reduced the provision from 2500$ to 500$ and my net worth did not change (2000$ less in the active/assets, 2000$ less in the passive/liabilities).

  5. Congrats on accomplishing your budget goals for 2015, its hard sometimes to adjust budgets and cut them down when sometimes its hard to shave some off. I hear you with the whole grocery thing; in my family my father has gone gluten free and it has totally shifted how much we spend on food and what we buy. We like to be able to save money by buying a meal that we can all enjoy !Gluten Free!

  6. Mrs SSC says:

    Emergencies a our downfall in 2015. We would’ve been on budget for the year if our AC didn’t break in November. That is a worry of mine- right now we have steady income… so a glitch like that is easy to handle. But in a few years, we will only have say an emergency fund with say $10k in it — if we have to take $7k our for a new AC, it will take a long time to fill that emergency fund back up without dipping into our investments. Maybe we need to budget for $3k of ’emergency’ a year?

  7. We “budget” pretty much the same way. Just aim to hit an annual goal and don’t worry too much about month to month spending, other than to make mid-course corrections that will get you to year end without blowing the budget.

    I would hate to follow a strict budget and realize “Oops, I spent our $500 grocery budget by the 27th so we can’t spend $10 on the 31st on fresh fruits and vegetables that are on sale and that are healthier to eat than the canned/packaged stuff we already have at home”. Maybe that’s why people get so burnt out on budgeting – the artificial constraints of a monthly budget make life suck too much in some months when unexpected expenses pop up.

  8. You guys are rocking it with your savings rate and focused goals. We don’t have the discipline to take 1/12 of our annual budget and color in-between the lines to smooth it out. It seems like there is to much change and chaos for us to budget that far out.

    Like I said Courtney, you and Steve are super disciplined and this works for you! Do you give lessons?

  9. That sounds like quite a comprehensive lesson. Congrats on sticking so closely to your budgeted amounts. We gave up on categorized budgeting and just go with weekly amounts, but I’m envious of people who can make categorized budgets work.

    I do like that you put expenses in a yearly perspective. We do put aside money each month toward yearly expenses like car insurance. Doing that has saved a lot of grief this past year, since we weren’t suddenly expected to cover $800. Instead, we just transferred the funds out.

    Last year actually went well for us. With the help of the yearly bonus, we managed to make the yearly savings goal. Now we just have to see what we can do this year.

  10. Mr. Groovy says:

    Hey, Courtney. Congratulations on your 2015 budget. Looks like you guys did a terrific job. But more importantly, I’m fascinated with the notion of a capsule pantry/kitchen. I don’t think I need as much variety as I’ve been accustomed to and I would like to simplify my meal choices. So bring it on. I’m looking forward to your insights.

Leave a Reply