Analyzing our Budget

When I finally sat down to create a monthly household budget, I came up with four categories: Fixed Expenses (parking and condominium dues, yaya's salary and benefits, PLDT and cable dues), Non-Fixed Expenses (Meralco, grocery, gasoline, eating out, laundry, water dues, lunch and taxi/fun fund), Savings/ Investments/ Protection (emergency funds, mutual funds investments, life insurance and health insurance) and Debt Payment (mortgage and personal loan).

Fixed expenses are pretty much set in stone so there are no savings to be had there, the non-fixed expenses are where we usually go overbudget, particularly with our grocery and eating out expenses. Knowing this, I started tracking these expenses by using the Goodbudget app, which is essentially an envelope system type of budgeting. I start the month by filling out an envelope, logging-in the corresponding expense in the appropriate envelope and watching the status bar move to the left.

It's a very helpful way to keep our expenses in check, because if the status bar is dangerously low and the end of the month is nowhere in sight, we try to adjust our spending accordingly. This means no going out and making the most out of what we already have in the pantry. Same goes with gasoline, although we rarely go overbudget, if the status bar is already gasping then I commute to work and/or we stay home during the weekend (staycation!). I track our groceries, eating out, gas, laundry and my taxi expenses.

I know that a popular personal finance advise is to take 10% - 20% off the top as savings/investment and just live off the remaining 80%-90%. This is to force yourself to put savings first before expenses. It's actually a good idea but I'm not comfortable with it because I want to know how much we can realistically afford to set aside as savings, moreover, I don't want to subject myself and my family to undue hardship in the name of saving money. But as it turned out, my fears were unfounded because as shown by our household budget, we were theoretically setting aside more than the recommended 20% (24.27% to be exact) towards savings and investments.

Using my salary as the sole source of household income (because my husband is a freelance web developer and his income is treated as windfalls that boost our savings or fund our little luxuries), here's how our expenses add up: fixed expenses = 19.94% ; non-fixed expenses = 30.68%; savings/investment/protection = 24.27%; and debt payment = 29.45%, for a grand total of 104.34%!!

Hello living beyond our means!

Right now since our budget is still recovering from the condo purchase, I've stopped contributing to my FAMI-SALEF account and stopped paying extra for our mortgage, funneling the extra payments towards debt payment instead. The plan is to reach our emergency funds goal of Php200,000 ASAP in order to remove that item from our household budget and bring our grand total to 97.38%. The end of the year also brings all sorts of bonuses and windfalls with it so we should be able to make a sizable dent towards our emergency funds goal within the next few months, even with our planned kitchen renovation. The general plan is to hoard bonuses and windfalls in order to apply them towards savings, investments and debt payment, in effect freeing up those items in our budget as quickly as possible.

It's funny how plotting a budget had the opposite effect of what I thought it would do. Instead of feeling anxious at finally knowing exactly how little we have or how f*cked up our finances are, I actually feel at ease since I now know what the status quo is and I can create a battle plan to help us act as the situation befits. Apparently when it comes to personal finance, ignorance isn't bliss.


Janice said…
Wow EF goal of P200,000? You must be earning much hehe..
The budget app looks nice. I might try that too. I only use excel and most of the time mano-mano with my little notebook when budgeting.. :)
Jillsabs said…
Diba an EF should be 3-6 months worth of expenses? So Php200,000.00 is just right for my family.
Janice said…
actually that's also my goal, 200k for EF with BPI Save-Up because the interest is higher compared to the regular savings account. It comes with insurance pa which is 5 times the amount that you have on the account (if i remmbr it right). that was my original plan, to save for my EF with saveup so i wont have to purchase a separate insurance.. pro mjo mtgal pa siguro bago ako mkaipon ng ganung amount. :)
Florlin said…
Wow! That looks like a very handy app. I just usually just write it down or make mental notes (and forget about them).

Goodluck in paying your debts!
Jillsabs said…
I love Goodbudget! It's much easier and safer than bringing actual envelopes with bills inside them.
Jillsabs said…
I'm interested in that BPI Save-up account. My EF is actually a BPI ATM account and if Save-up has a life insurance aspect, then I can consider that as part of my source of insurance protection. Nice!
Invest-friends said…
Tracking records or taking notes in every expenses or everything we do that we wanted to change especially our expenses is the number one step in reaching our goal this according to the financial literacy books I read. This way, we can determine in which area we spend frivolously and also to correct our self.
It takes courage and discipline to take down notes every bit of it but doing so will help us reach our goal. In my case, I am not really good at tracking all our expenses. But I need to do it.
It seems like frugalhoney is doing well with the budgeting.

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