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At least one reader was shocked by my disclosure that my monthly budget is $1,200. In a comment about whether a $533 mattress purchase should come out of my budget or my savings, Cindy said, “If you easily have $1200 free cash to spend in a month…wow! That’s not being very frugal.”
Let me explain my budgeting system and why I give myself so much leeway.
I have tried many, many budgeting systems, from tracking every penny to estimating monthly costs by category. None of them worked because they all relied on past purchases to predict future ones. What I spend my money on varies widely. One month a plane ticket may eat up a good chunk of my dollars. During another month a wedding or home project may account for much of my spending.
What does not change is my total spending, certain fixed bills, and my income.
I decided to use this information to create a forward-looking budget (the pdf is safe to download). I start with my income, subtract my fixed bills, and am left with a monthly spending amount (my budget).
My fixed bills include basic necessities and any bills that must be paid including my rent, savings contribution, 1-tank of gas, student loan payment, cell phone bill, and regular prescriptions. Everything else comes out of my monthly budget.
- groceries
- second and third tanks of gas
- gifts
- travel
- clothes
- coffee
- movie rentals
- toiletries
- meals out
- drinks with friends
- hair cuts
- yoga classes
- gardening supplies
- car washes
- vacations
- anything else
Still think $1,200 sounds like a lot?
I gave up credit and debit cards this month to try to reduce my monthly budget. Previously, I went on a spending moratorium to learn new habits. My 15-minute budget may or may not work for you. The first month I used it I reduced my credit card bill by $2,000. Give it a try and let me know what you think.
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price. 
Yes, $1,200 still sounds like a lot. Other than my fixed bills, the only thing I regularly spend money on each month is groceries. My family of 3 spends only $160/week beyond our fixed expenses. You are fortunate to be frugal because you want to be and not because you have to be.
No criticism of your spending. You stay debt free and seem to manage your money well. As long as you have enough going into savings, you’re good! You are fortunate to have so much discretionary income. I support a family of four, and even in good times my budget for the above list would be less than $1,000. Today it’s about $650. So, be sure you enjoy what you are fortunate to have!
I’m giving myself a little time to cool down on this. No problem with the way you spend your money, I believe in saving as much as you need and spending responsibly on the things that matter to you. But the tone of the question at the end? Very, VERY irksome when I think of friends and family who are actually struggling with their finances. So, yes, relative to the disposable income of others and the easy fixes to some of these areas of spending, I think $1200 is a lot.
Summer wash your own car challenge, perhaps? It could be fun. 🙂
Thanks for these comments so far. I am very fortunate to have the income I do, and I work hard to avoid a lot of fixed regular expenses. I buy used cars and save up until I can pay in full, thereby avoiding a monthly car payment. I also pay off my credit card bill in full so I don’t get nabbed by high interest rates. I’m sure later in life I will have many more expenses related to raising children and owning a home.
I remember how fiscally irresponsible I was in my youth, and think you’re showing much more sense than I ever did in my single days. My only suggestion is to increase your savings beyond what you think you’re able to set aside. A financial advisor once told me that if I thought I could save $50, I could probably save double that, and not truly miss the extra disposable income. He was right, and I’ve been a better saver ever since.
Yes, $1200 a month seems like a lot of discrestionary spending, but if you pay your bills, and maintain a balanced budget, more power to you. The only thing I was thinking is do you contribute to an emergency fund and to retirement savings? Both necessary for a savvy financial plan.
@Jim Yes, I have an emergency fund equivalent to 6 months of my basic expenses. And I have a super emergency plan: move in with my Mom and step-father, who have extra bedrooms where I could live rent free.
@ellie I am quite the saver. I max out my Roth IRA and am setting aside a good chunk of income for a SEP retirement plan (a self-employed version of the 401k). I’d rather save a bunch now and retire as early as possible!
I don’t think $1200 is all that much. Our grocery bill for 2.25 (small baby) is about $500 a month. And if you’re saving $$ then you should enjoy life too. Some friends of mine save almost everything and never do anything or go anywhere. What is the point in that??
@Christine Yes, groceries easily eat up a third of my monthly budget. Makes me wonder if eating healthy is really cheaper than eating tons of junk food?! I should look into this!
Your budget methodology resonates well with me. I have a separate chkg acct used for paying mort, taxes, insurance, utilities, and car pymt when I had one. Yes, groceries, gas, hair cuts, etc may be a regular part of the budget, but I see them as different from those strictly regular and rarely fluctuating expenses. I can cut back on my grocery bill by my choice of food (and even gas to a degree, by my driving habits outside of work commute), but I cannot adjust my house pymt, etc.
And even tho I use credit cards (and pay off every month), having the money allocated in different chkg accts makes it easier for me to see how much cash I have available for meeting my “discretionary” budget as it is reflected in purchases on my credit cards.
Thanks for the interesting post.
Joshua, sounds like you have an interesting system that works for you. Your system is like a modern day version of putting bills in envelopes. Is it hard to keep track of all those different checking accounts?
It’s your money, you earned it, why should anyone care how you decide to spend it.
Juila, I’d love to see the cost comparison of eating healthy/organic/local vs. eating junk food. My guess is that eating junk food costs you alot more in the long run with the health-care costs related to a poor diet. Just a hunch though. I choose to spend more on organic and healthy food. I have alot more energy and my kids are learning some valulable lifelong habits.
Julia, I’m delighted that you’re a big-time saver, and wish I’d started my savings much sooner than I did. You go, girl!
As for the merits of healthy/organic eating as opposed to junk food… Isn’t that a good topic for another BB posting, apart from how to budget one’s money?
@BB: No, not really. My system really involves just 2 checking accounts (one for the regular bills, one for everything else) and 2 savings accounts (one for play and one for emergencies/house projects/etc).
I use Quicken to keep everything straight, and with a decent-sized monitor, I can view it all at once.
I budget similarly in that I add up what my fixed costs are each month – credit cards, energy bills, etc. (my hubby pays mortgage, DWP, cable) Then I deduct that amount from my monthly paycheck (I’m a teacher). I then divide that amount by the number of days left until my next paycheck, and that’s what I give myself to spend each day. Gasoline, food, cleaning, retail purchases come from this budget. If I know I have a big expense coming up (usually taking my grown kids to dinner) then I make sure I don’t spend a few days before or after, and then that gives me more to spend for dinner. I revise my daily $ allotment about once a week to see how I’m doing. 50/a day is low, 80 is good and this month with about 6 days left, my daily allotment is up to 200/day! which means I’ll have a lot extra at the end of the month to either pay off a credit card or pay to get that dead tree cut down.
I am young with a good income and I follow this budget as well, putting aside all my fixed expenses and the rest goes to my disposable budget, but I am still frugal – Say I have $1000 to spend per month with $200 in my savings, but I only spend $600, the excess goes into my savings as well! I give myself the option to spend the $1000 if certain things come up (like a concert that I want to see) but if I can curb my spending, more goes into my savings. Try it! 🙂
@Teri Sounds like a great plan, Teri! I’m glad you are taking care of your financial health at a young age!
I think it’s interesting that some readers seem offended that $1200 is your discretionary income. I am a 23 year old with a decent enough income, and after my monthly fixed costs (rent, cell phone, utilities, gym), and set amount I put into saving each month (equal to around 15% of my monthly income), I am left with about $1600. This may sound like a lot, but I live in New York City, and the price of anything and everything is more expensive (I am single and groceries come to more than $500 a month). To me, $1600 is barely scraping by.
People need to remember that $1 does not get you the same distance everywhere. You can’t just look at a dollar figure and say its too much/too little
@Joe Good points all around, Joe. Thanks for reading BargainBabe.com!
I’m delighted to know that there’s at least one young person around who is aware of the need to keep track of expenses and related expenditures. Joe is the same age as the younger of my two CA grandsons, and Sean is not nearly as fiscally aware as Joe. Joe, your perspective is unusual for someone so young… Gives us hope for the future!
@EllieD
You should introduce your sons to Mint.com (which, coincidentally, is how I first heard about the BargainBabe). Its a really excellent tool for managing personal finances, and it completely changed how I look at my monthly budget.
I’ve noticed more and more lately that people my age are becoming far more interested in the management of their finances then perhaps was the norm in the recent past. I have casual conversations about savings plans, investment goals, and frugality all the time (and I don’t necessarily run with the “crowd” you’d expect it to come from). I assume its a sign of the times, but I hope, as you say, its also a little hope for the future.
Thanks for the suggestion, Joe. I’ll pass it along to my two grandsons, and will hope they decide to try mint.com. You’re not the first person to mention the site on BB.
I don’t think $1,200 a month is excessive. That is how much our family of 4 has leftover after all bills are paid. Then from that $1,200 there is gas for my car and my husbands weekly gas bill combined for both of us is $40 each total $80 a week equals $320 a month. We live in a busy high traffic ciry, San Antonio, TX. Then there is grocery budget for the month of $500. So after monthly gas and grocery that only leaves only $380 for the whole month. Thats less then $100 a week spending money for a family of 4. How is that excessive?