ChooseFI Logo

The Breakdown Of Our Budget–Why Following A Budget Doesn’t Always Work

After months of pushing to reduce our expenses, I have recently come to the realization that we can’t really cut them down anymore. We have a budget and we largely stick to it, but I don’t think those expenses can be reduced much further.

Below, I will lay out our monthly expenses and then discuss why it doesn’t really matter anymore!

The Budget Breakdown

Mortgage: $1,853 (We live in the DC suburbs remember!?!)

Daycare: $1,040

Utilities: $300 (gas, electric, water, internet, cell phone)

Groceries: $175

Gas: $150

Shopping: $100

Restaurants: $100

Charity: $80 (we front-loaded our charitable giving into last year to save on taxes)

Alcohol/Bars: $50

Fast Food: $10

The grocery secret

Everyone I relate our budget categories to always zooms in on the grocery budget. They can never seem to understand how we spend so little on groceries for two adults and a one-year-old. Well, I think we could easily cut our grocery spending further, but we don’t need to. We still get to enjoy fresh fruits and vegetables year round. The secret to this grocery budget is buying seasonally when needed and in enormous quantities when deals are good.

We shop at Aldi, and Sunday mornings are the best time of the week. They often have reduced prices on meat which is usually people’s most expensive food item. Consider bratwurst, normally $3 per package but on Sundays, they have a $2 off sticker on them due to a “Sell By” date of tomorrow. You better believe I’m going to buy all 15 packages they have in the cooler! We have a chest freezer at home, so it’s no problem at all to eat down our inventory over the next six months. Also, we focus on the sale items and fairly exclusively eat those fruits and vegetables that week.

The real secret is self-sustenance or individualized food production. We don’t purchase vegetables from May to about October. That’s because I have a garden which produces abundant amounts of vegetables. I’m hoping that my apple trees will take off this year and produce for us, but that may be a longer-term solution.

In addition to producing our own vegetables, I hunt and store away venison for the whole year. Therefore, we don’t purchase beef at all. My family puts away about 200-250 meals of venison each fall, and it easily lasts us until next hunting season.

The Budget Broken Down

For all of that granularity and scheming, my wife and I don’t really follow the budget anymore. After so many years of following the budget and being frugal-minded, we realized recently that we don’t really need to do this exercise anymore.

Every month, we spend between $175-200 on groceries. That is our equilibrium point and we almost always revert to that. It was a relaxing realization to come to, we no longer feel the need to worry about the recurring spending categories.

We do monitor things and make sure nothing is going off-kilter. If our grocery budget started inching into the $225-250 range on a recurring basis, we would reevaluate and try to correct the issue.

Related: Mint Review: Is This The Best Free Personal Finance App?

What Matters Instead

Now that we’re free from the regular budget categories, we’re able to worry about the large expenses that really matter from an overspending standpoint. For our family, those include: insurance, travel, and toys.

Every six months (auto) and year (homeowners), when our insurance renewals are due, I note the new premiums in a spreadsheet and compare them to the prior year and the last comparable quotes I received.  

If the premiums increased more than a few percent, I shop everything again. This gives me confidence that I’m getting the most value out of my insurance coverage. It’s very important to note the times when changes on your policy occurred, as you probably won’t remember 18 months from now why your premiums changed so much. Did you change your coverage or have an accident? You’ll probably remember that it happened, but when exactly? In my area of the country, there aren’t many events that cause insurance companies to reanalyze their risk pools and reprice insurance, so my personal data history has served me well in figuring whether my premiums are changing for no valid reason.

When planning travel, I like to think of places that are more valuable than others for temporal reasons. After the Iceland volcano erupted, I wanted to visit Iceland because I figured it would be cheaper due to lower tourist traffic. At the time of the Greek financial crisis, I wanted to go there too. Unfortunately, my wife isn’t as interested in visiting these places during their most trying times in recent history. Therefore, we usually end up elsewhere, among the other tourists, paying normal prices for food, lodging, and transportation.

Spending on toys and luxuries doesn’t happen very often in our household. However, every now and then, we end up splurging on items that we’ve been lusting after for months or even years. The new camera for my wife is a great example. She’s been talking about this for months and I finally took the plunge for her birthday. Maybe I’ll be able to borrow it from her to add some pictures to the blog!

Why This Spending Matters More

Since we’re on autopilot in our regular budget categories, the real savings and improvements to our spending will come from the lumpy, abnormal spending in the travel and toys categories. These items can add up very quickly, and since adult toys are much more expensive than my daughter’s toys, they can upend the whole journey if we’re not careful.

Spending an extra $250 per month on luxuries could add up to a year’s worth of extra work over the course of even a short working career. Even more importantly, travel expenses can explode out of control, especially if it’s the only vacation you’re taking in a year when you’re more likely to rationalize the extra expenses.

Now it seems easy for us to exercise control and good judgment on our regular spending, but I’ve found we need help on these other categories.

What about you, what are your splurge areas and do you have any tricks or tips to manage the spending there?

The Breakdown Of Our Budget--Why Following A Budget Doesn't Always Work


Subscribe To The FI Weekly

Action, accountability, inspiration, and community. Join the movement. Get started on your Path to FI

More To Explore
Life Optimization
Life Optimization
FI Frugal Hobbies | Chris Terrell | Ep 429

Whether you’re years into your FI journey or just beginning, evaluating your finances and spending, you may feel like you have to make some cuts into your favorite hobbies in order to reach your goal quicker. However, deprivation and cutting out the things that bring enjoyment into your life should never be the only option. This week we are joined by friend of the podcast Chris Terell to talk frugal hobbies, new experiences, and the parallels between strategies in board games and the strategies employed while on the journey to FI. While trying to optimize your experiences may mean changing hobbies and evolving, while doing so you may find new enjoyment, new communities, and values that come with these changes. Not everyone may have the same approach to a game, just as not everyone will have the same approach to achieving FI, but as long as you remember that being open to changes will allow you to not only optimize your experiences on that journey but optimize your FI. 

Read More »
Life Optimization
Life Optimization
Fees, Frugality, and 401K Fears | Ep 428

On what is considered a very personal journey, how do you handle changes that feel like setbacks? Whether its spending more when you feel you should be saving, or re-evaluating goals based on what needs immediate attention, do you feel equipped to handle it with confidence? This week we are having a weekly roundup, and are re-joined by Ginger to not only answer listener’s questions, but discuss travel rewards, retirement accounts, and breaking away from the ultra frugal caricature often depicted alongside FI. While saving is an important factor on this journey, the main purpose of FI is to learn and live your life with intention as it relates to your money, goals, and values. Remember that it’s okay if some of your goals and values will change along the way! Allowing yourself to be flexible as it relates to external factors, like market volatility and your investments, will give you more power and control to continue ahead with confidence and optimism! 

Read More »
You Might Be Interested in...
Share This Post
Share on facebook
Share on linkedin
Share on twitter
Share on email
Share on pinterest