I’ll be honest, me and my budget have not been friends recently. We’ve been struggling to communicate, and when we do it always ends in confusion and despair! Some months I save the right amount according to my budget, and other months I fear I will never save a penny again.
Inflation is affecting everything I touch recently, including my apartment. My rent is going up in September, and over the summer I spend about double on electricity with the luxury of air conditioning, so it’s time to revisit my budget.
Last time we talked budgeting, I was using the percentage budget outlined in Erin Lowry’s “Broke Millennial.” I’m going to stick with it for now so that I can make sense of how much I really have to spend after these changes take effect. The percentage budget allocates 50% of monthly income to fixed expenses, 20% to savings or financial goals and 30% to wants and flexible spending. My rent went up from $1,085 to $1,200 (yes, I tried to negotiate with my landlord, but he said they were already eating part of the cost with that increase—oof!), and with double the electricity my utilities are $110.
I’m relieved that my total fixed expenses are still under 50%, though just barely! I decided to break down my leftover money (after savings are accounted for) on a weekly basis to see how much I can really spend per week. This encompasses groceries, going out to dinner with friends, etc. Though I probably won’t track everything down to the cent, I will keep in mind what I can actually spend instead of just guessing and hoping I’ll have enough along the way.
Now that I’m contributing to my retirement account, just a reminder that the monthly savings percentage doesn’t include retirement savings. This is because the percentage budget should be performed using your aftertax income and retirement contributions will come from pretax income—unless you’re fancy and have a Roth 401(k) or similar account.
We’ll see how this budget works out, and I’ll check in with you all when the leaves start falling and everything starts dying around us—my favorite time of year!.