My take-home salary after taxes, benefits, and a 5% 401k contribution is $5494 per month. I’ve been trying to keep a budget, but blow through it every month. Today I paid off my credit card so I’m trying to do a budgeting reset. The problem is when I put it all down on paper, I have zero buffer, and I’m not sure where I can trim from.
For context, I am a single mom living in a one-income household, in a MCOL city.
Housing: (mortgage, HOA, utilities, phone, internet)
$2494 – 45% of budget
Transportation: (car payment, gas, insurance, maintenance)
$750 – 14% of budget
Food: (groceries, toiletries, occasional door dash, dog food)
$950 – 17%
Childcare: $600 – 11%
Savings: (emergency fund in HYSA) $400 – 7%
Lifestyle: (gym membership, shopping, fun money)
$300 – 5%
Am I missing anything obvious here, or do I just need to accept my paycheck to paycheck existence?
Help my budget – no wiggle room.
byu/beertrailerkittens inpersonalfinance
Posted by beertrailerkittens
10 Comments
Some of this is too general to help.
When’s the last time you shopped around on your phone provider, internet provider or car insurance? How much are each of them right now?
What’s your car payment and how many months are left on it?
How much of food is the occasional door dash?
With all of that said you have a savings. I’m sure you’d like it to be higher but you are presumably putting money away and not touching it.
Look for new home/car insurance usually is a good way to save some money. Also food budget try to shop for sales. Look online or at ads that come in the mail before shopping and buy only sale items. Doing both the above could easily save you $150-$200 a month.
Your child care is dirt cheap not sure how you’re getting that to work.
Your food is high – maybe too much DoorDash. When I have looked at that the premium is $10-$20 per trip compared to getting that myself. On food, I spend $15k per year with 5 people and low out to eat.
My guess is you have these numbers but you aren’t actually sticking to them. What category is being blown out when you go over budget? I don’t see vet costs included here but I do see dog food. Pets are expensive. There are a lot of expenses people don’t think about when they make their budget and then the budget doesn’t work. (Home maintenance, random school fees, gas prices going up, doctor’s visits etc). I would take every expense from last month and plug it into your budgets and see what your actual spending was. I would even consider going back 3-4 months and doing the same exercise.
ETA: I actually would consider 5% retirement savings and 400 a month to savings NOT living paycheck to paycheck, so if those two things have been consistently happening, you may just be in the expensive child care sucks portion of life.
You are most likely blowing your budget due to sinking funds. These are those expenses that don’t happen every month but are inevitable. Things like home/auto repairs, car registration, amazon prime, professional dues, school photos, birthday parties. I am a large fan of YNAB as it allows me to start budgeting for these sinking funds. It also lets you track every purchase and assign every dollar a job.
For a single parent, child, and dog $950 a month is a lot for food. My family of three (plus two cats) is in a MCOL city and spends around $800 a month. I would look towards cooking at home, or going bulk/generic (Costsco for the win).
Also, Transpo ($750) is 14% of your income. Large tickets in this category like insurance can be lowered by just shopping around. Shit, sometimes threatening to leave your insurance can get them to drop the cost.
I always embrace the money guy philosophy of creating margin. We often cannot easily control the amount of money that comes in, but we can control the money going out. Living on less then you make allows for more margin, more saving, and more buffer. This allows you to make smart decisions and prevents emergencies that drain your savings. Track EVERY expense, and try to look for any way to lessen the most expensive fixed expenses like housing and transportation. You are not destined to live paycheck to paycheck, you can create margin and escape the cycle.
Is it considered paycheck to paycheck if you’re still able to contribute 7% to savings every month? Not sure what you mean by “zero buffer” as this is at least a small amount of flexibility.
Do you have a spreadsheet or way of tracking actual expenses within these categories? It might be helpful to look at how much of food budget is going to takeout for instance, and if you feel like that’s a fair amount relative to other expenses. Categorizing things like food but including toiletries makes it hard to delineate where things can be cut. Overall grocery bill of $950 for 2 is high in MCOL but I’d imagine your actual groceries are a lot less.
if you don’t work-from-home and your kid is not in school, you can eliminate internet & streaming services, that could free up around $100-200 a month. you can buy a $30 antenna to get free local news & PBS for the kid, thus eliminated the cable/sat tv bill if you have that.
Shop around for plans on cell phone, we reduced ours from $100 to $60 a month without changing providers or data plans, just by taking advantage of “deals” they have that they don’t give out unless you specifically ask for them. same with car insurance, and gym memberships, shop around & ask about reduced monthly cost at your current place, we asked and were told there were no discounts available, so we said fine then we will just cancel them, all of a sudden they offer us gym membership at half the price.
little things like finding a way to save $30-$50 a month amongst several different categories could save you a few hundred a month, even if only for a year. it gives you a cushion in your bank accts.
also because you are funding your retirement and your savings, the month-to-month break even budget isn’t horrible, true paycheck-to-paycheck living wouldn’t have emergency savings, gym memberships, door-dash, or retirement funding included in it, so your getting ahead every month even if you are not really felling it/seeing it in your checking acct.
your grocery bill could probably be reduced a bit also, don’t fell bad about going to the food-shelf or getting food assistance from other local groups/church programs ect, your a single mom, take advantage of free food, plan more inexpensive meals, more rice, beans, pasta (cheap bulk ingredients). shaving $50-$100 off your food expense shouldn’t be to difficult, and that done over a year will help build up the checking acct.
You’re not in a paycheck to paycheck existence with a car payment, 5% to 401K and 7% to savings, and 5% to fun. I don’t know how many kids you have but $950 a month in food and sundries seems like a lot. If your gym membership is $100+ you’re probably overpaying for what you actually need and that leaves another 3% of flex spending that’s discretionary. Seems like you’re probably doing fine but once daycare falls off and car payments go away you’ll have another 15% of flex in your budget which could basically get you to a 30% savings rate.
I’d consider you house poor if your housing expenses are taking up nearly half of your post tax income.
How many kids do you have? $950 a month would feed you plus 3 kids. (Or maybe it is 2 kids and a dog?)
If you are saving 7% consistently, every month, then you are not paycheck to paycheck.
Secondly, we don’t have enough information to be much help with specific recommendations. You may be able to get cheaper- phone, internet, insurance, gym membership, groceries. You can cut out door dash and go pick up food when you want to eat out. You can cut back on “fun money” depending on what that means.
Do you have any subscriptions like Spotify or Netflix?