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I’ve been budgeting for a while now and what I find interesting is how we all create budgets to stay organized and on track, but life is never so clear and predicable. Things happen, circ*mstances change, and mistakes are made. It’s all a part of life. The key to effective budgeting is being realistic, keeping it somewhat flexible and being open to change when it occurs.
I’m so glad I was finally able to redo my budget because while I continued to do budget reviews after each month, the original budget that I shared last year has changed drastically.
For starters, we moved so my living expenses have changed, I’m no longer paying for child care and a few other factors have contributed to my expenses changing.
This year I decided to save half of my income in order to help me get closer to paying off all my debt and reaching financial stability. Each month I share a portion of my journey toward saving half on Frugal Portland. I recently discussed how I not only wanted to survive on half of my income, but how I also wanted to thrive and continue to do the things that make me happy. The road hasn’t been easy, but it’s well worth it.
I played around with some numbers and came up with this budget for my living expenses and saving goals each month. I’m all fancy with my spreadsheet now 🙂 I’ll start using this budget in July so I’ll be able to report on how well it’s going in my budget review at the beginning of August.
Trying to Budget Down to Zero
I’ve never had a budget quite as clear and specific as this one and my main goal was to try to budget down to zero each month. I’ve never budgeted every dollar I earned each month with the intention that the leftover money at the end of the month will be saved or put aside as a cash buffer for the future.
Well let me tell you, I can only speak for myself but when I used to budget like that, there was no money left over at the end because it was all spent or tied up into something else. When I sat down to do my budget reviews, I’d compare my spending to my income and find out there was $100-200 in what I call ‘missing money’.
I used to have to search through my bank statement and dig up receipts to find out what I did with the money and that was super annoying. With this new budget, I can’t say I’m budgeting exactly every dollar I earn – because my freelance income is steadily increasing and it’s very irregular – but this budget does allow my ‘extra funds’ to get extremely low and I’m hoping that whatever extra freelance income I do have will be going toward debt and savings.
Related: The Ultimate Guide to Budgeting
Why Save Half?
Ever since I read about Kathleen (from Frugal Portland) and LaTisha (from Young Finances) talk about saving half of their take home income. I was floored. I knew it was something I wanted to do and while I don’t make a ton of money, I finally have the mindset and dedication to do it.
What motivates me? Debt. Getting rid of my debt and becoming financially stable so I don’t have to live paycheck to paycheck anymore is my bottom line. You just don’t know how sick and tired I am of having to pay lump sums of money to lenders each month. But maybe you do.
I can only imagine what my life will be like when I get paid and don’t have to send a chunk of the money away for a debt payment. I’m so over being in debt and having it hold me back. Even when I become debt free, I will continue to save half because it will give me more opportunity. Even though I plan on increasing my income as much as I can, right now I’m at the point in life where I need to keep my expenses low in order to make this work.
By saving half of my income, I can invest more, build up my emergency fund quicker and save for a down payment on a house. All these goals would be more difficult and take longer if I committed to only saving 10% of my income.
I’m one of those weird frugal people who absolutely loves the idea of living well on less so I’m going to embrace this period of my life.
Have you ever tried to save half of your income? Do you budget down to zero each month or do you prefer to have a little extra breathing room with a financial cushion?
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About Choncé
Chonce is a personal finance blogger and freelance writer who enjoys sharing debt stories (as she and her husband work their way out of $40,000 in debt) along with talking about saving, budgeting, conscious spending and improving your financial house. In her spare time,she enjoys working out, playing sports with her son, cooking, and thrifting.
Reader Interactions
Comments
thesingledollar saysImpressive! One question: why are credit cards on the “expenses” instead of “savings” side? Anyway, looks really rad. I’ve been trying to save 50% this year too, and it is NOT easy — my basic expenses are very low, but stuff keeps coming up (repairs, clothes, emergency travel) and I don’t know if I’ll make it. I should get really close, though, even if I don’t quite get over that 50% hump. Budgeting down to zero is something I started doing a year ago and it’s made a huge difference, for sure; I have some posts about that coming up in July after I officially hit the year mark.
- Chonce says
That’s a great question. I usually don’t carry a balance on my credit cards so I don’t really consider the spending or even paying the bill as a ‘debt’ payment. I use a few cards each month for miscellaneous expenses like my son’s haircuts, my tollway pass for driving, etc. to get points and rewards and I pay the card off very soon after using them. It could be on the savings side, but since I’m covering monthly expenses and paying them off soon after I guess I just see it in a different way, if that makes sense. I really do hope to keep my credit card spending low so I can use anything extra to go to my cash buffer.
Car repairs and expenses keep slowing me down too, which is why I designated a savings category to those pesky expenses. I think just saving more than 20% of your income is super impressive, so I wouldn’t sweat it. And I can’t wait to check out your posts next month. I should have started budgeting down to zero forever ago.
- C@thesingledollar says
Makes sense about the credit cards — I wondered if it might be something like that. And I agree, zero budgets are amazing.
- believeinabudget says
I haven’t tried savings half my income yet. I think the only way I could do it is if I was able to slash my rent to a normal number, nix the medical bills, student loans and increase my salary, ha! But that doesn’t mean I won’t be there someday. By being active now, I’m prepping for the future. I really admire you for doing this, can’t wait to see your posts on this!
- Chonce says
That’s great that you’re working toward it. And it’s funny how we both seem to check out each other’s blogs around the same time. I just saw that you’re planning a move to Tennessee and I think it’s a great decision. I’m sure your expenses will decrease since it’s a more affordable area. Wishing you all the best!
wow nice job! Your expenses are super..I mean SUPER low! I’m pretty sure living in Cali it would be damn near impossible to save 50% unless I lived with 10 people, which I’m not willing to do. lol! Keep up the great work and hopefully you will be out of debt in no time!
- Chonce says
I definitely wouldn’t last in Cali, haha. It’s so beautiful though and I can see why things are more expensive on the west coast. The midwest is very affordable as long as you stay away from major cities but it’s not extremely exciting unless you’re creative or easily entertained.
- Katasha says
Sorry to butt in (LOL) –
It depends on where you live. I live in SoCal and my boyfriend and I split rent ($1100/2 = $550 each) for an apartment within walking distance (like barefoot walking distance) to the beach.
BUT then again, in 5 years it will probably get way more expensive due to urban renewal.
Darn hipsters!
- Jennifer @ WanderlustWallet says
This is great — congrats on developing this budget and a plan to save half your income! Your expenses are impressive. I know you split the monthly grocery costs for your household, but I still cannot get over your grocery budget. I miss living in a lower cost area in the Midwest sometimes. Good luck with paying down your debt, and I’m looking forward to the updates!
- Chonce says
Thanks Jennifer! Yeah groceries and rent are split down the middle so that helps a lot. I’m sure when my son gets his ‘big boy appetite’ our food budget will increase but I’m enjoying it for now
- Kirsten says
Kudos to you! We basically live paycheck to paycheck (on our six figure salary), but we do put quite a bit extra toward loans now that we have paid some of them off. I’d love to one day be saving half – or more!
- Chonce says
That’s great you’re making progress on paying back your student loans. Most people (self included) count debt payments as savings so you may be saving at a higher rate than you think.
- Diane says
Well done on hitting the big numbers! I must admit, it’s been a while since I’ve been able to save a big chunk of my income. It was a lot easier to do when I was an employee. Being self employed has proved more challenging on the revenue side of the equation! I can’t wait to be saving a large portion of my income again – it feels good knowing you’ve got a nice thick buffer between you and adversity.
Keep up the great work!
- Chonce says
Thanks Diane! I’m sure self employment has it’s ups and downs just like working for an employer. What kind of work do you do?
- Prudence Debtfree says
We have pretty well paid half of our take-home income against debt. I used to think we were far from that level – and then I realized that I hadn’t taken into account the interest that we were also paying. Add that in, and we’re at about 50%. Now that we only have the mortgage left (not that there’s anything “only” about $128,000), we will be saving as well as paying off debt – as per Dave Ramsey’s plan. So while we won’t save 50%, I think that our combination of saving and intensified mortgage repayment will come to about 50%. If you can do this on a modest income, Chonce, just think of what you’ll be able to do with a higher income!
- Chonce says
That sounds like a great plan! And congrats again on paying off all the debt, you’re awesome! I’m sure you’ll knock out the mortgage in no time with your dedication. When I do start earning more, my goal will be to avoid lifestyle inflation so I can get ahead financially quicker.
I mean, in my perfect world we would save half of our income, but I don’t think it’s realistic right now. We have a large monthly student loan payment each month, our mortgage, and a number of other expenses that we’ve pushed down about as far as we can. We do save and invest some but with both of us in grad school it would make more sense to pay down debt than to throw it into savings.
- Chonce says
I agree. And it’s great that your employer is helping you out with your MBA program because that would be a lot of money to pay out of pocket without going the loan route. I actually count my debt payments as saving (well the amount that goes toward the principle at least) and while it would be nice to just save large amounts of money each month, I’d rather build up a decent emergency fund, pay off debt and invest because having your money sit up in a savings account doesn’t do much aside from giving you some reassurance.
That’s so great that you’re aiming to save so much. I echo what Tonya said in that there’s no way I could save half of our income living in LA. I think it would be doable though if I still lived in the midwest. I have used a zero based budget in the past (when my husband and I had separate finances) and I LOVED it. My husband, on the other hand, likes to have much more flexibility with our money. We don’t even use a budget per se, rather I carefully track our spending to make sure nothing gets out of hand. Could we do better with a stricter budget? Absolutely. But marital harmony is worth the money in my book. 😛
- Chonce says
I agree, marriage is all about compromise and making sure both people are happy with the way things are going. Budgeting works for me, but I understand that it isn’t for everyone. It’s great that you track your spending though and keep an eye on where all the money is going.
- Jason @ TheButlerJournal.com says
That is impressive to say the least. If I wasn’t trying to pay off my debt I would definitely shoot for saving half of my income.
- Chonce says
Thanks Jason. Did you know you can count the debt payments you make toward your principle balance as savings? That’s what I’m doing, check it out: http://frugalportland.com/save-more-than-half-your-income/
- Tennille says
I think that’s and awesome goal! We currently send every spare dollar to pay off our debt, but if we didn’t have the debt we do I think we would give this a try as well.
- Choncé says
That’s great that you’re committed to paying off your debt. I actually count the amount I pay toward the principle balance as savings as long as I don’t continue to rack up any more debt.
- Charissa says
Saving 50% is awesome! I will do that one of these days, after my husband finishes school. And you’re doing a really good job of paying down your debt too! A zero-based budget is so helpful in keeping a handle on expenses. Though I should budget a little extra, to cover those unexpected expenses that always come up.
- Choncé says
I have no doubt that you’ll get there. Tuition is not cheap. You’re doing an amazing job with saving so far.
- Katasha says
50% of your income?!?! That’s awesome! Looking forward to seeing how you do.
Also, re: debt repayment – I HEAR ya. It kills me to watch a big chunk of my money just float away each month.Hopefully we’ll both get there soon!
