Budgeting Basics | Our 2012 Budget – What Changes We’re Making & Why

This morning, I sat down to fine tune our January budget in Excel. (Even though I love Mint, I plan out our budgets in Excel every  month, and then transfer those totals over to Mint as necessary. I use Mint primarily for tracking, and Excel for budgeting.)

I’ve tweaked a few things, including increasing our blow money budget to $80 ($40 per person) as I talked about here.

My husband and I are also going to make a much more concerted effort to consistently fund our retirement accounts this year. While our goal remains 15% of income toward retirement every month, we still aren’t quite there in terms of our income and other expenses. We have set up a standard savings rate for 2012 of 11% every month and plan to apply any windfall money to topping off our retirement accounts.

The biggest change, though, for 2012 has been increasing our food budget from $500 to $700.

Whoa. That’s a 40% increase.

This year we are expanding our household – no, we’re not having another child. Rather, my mother is going to be living with us for at least the next year.

With another grown-up mouth to feed, I knew that I needed to adjust our food budget. It’s been a while since I’ve had to make this big of an adjustment, and honestly, I’m not sure that we’re going to need that full $200. But I’d rather have the wiggle room, than end up blowing my budget half-way through the month.

If, after a few months, I find that we’re consistently coming in under $700, I’ll adjust that amount down. But for now, our food budget is going up – by a lot – and I wanted to tell you guys why.

Of course, increasing food spending by $200 means that we had to decrease our spending in other areas in order to balance the budget. For now, the biggest casualty was our our vacation fund, but other sink funds have been reduced as well. Hopefully we’ll be able to earn more income in 2012 to help us bring those funds back up to my comfort level.

The final change to our budget – and our  home! – is that we’ll be doing some construction in our basement. We will be carving out a separate guest bedroom from our furnished basement playroom and converting a half-bath into a full-bath. We’ll be sticking to a strict budget and paying cash, but doing so will mean emptying out our home maintenance sink fund.

A top priority in 2012, therefore, will be building that fund back up. As I’ve mentioned before, one of the way ways we insulate our Emergency Fund is to build fences around it with short-term sink funds for unplanned but predictable expenses.  We won’t be touching our Emergency Fund to do this construction, but depleting our home maintenance fund means the EF becomes vulnerable to any of the fun little things that always seem to pop up with home ownership.

I hope that sharing our personal budget adjustments with you helps to drive home the point that budgeting is not a static activity.

Our lives change, our families change, our income changes, our priorities change – and our budgets have to change accordingly.

Have you reevaluated your budget yet for 2012? Any big changes on your horizons? Will food spending be going up? Or coming down?


  1. We opened an ING ElectricOrange account and moved over our January food budget to that account. (Now to eat out of the pantry until our debit cards arrive… we’ll do our best…)

  2. Jessi Levy says

    I just have to tell you, I’m learning so much about budgeting from you!!! Thank you so much for sharing 🙂
    We are currently making our budget and looking for cuts, but the biggest change for us is doing the cash envelopes for our food, houshold and child expenses. We consistantly have over spent in those areas every month last year, so having to go old school to get our spending back on track!

    • Woohoo – cash envelopes 🙂 The “when it’s gone it’s gone” thing is soooo good for sticking to the budget!

      Thanks also for your kind words, Jessi. It means a lot to me. I know I get pretty personal with our money stuff (I always share these posts with DH first to make sure he’s okay with it), so I’m really happy to know that it’s helpful.

  3. It’s “whoa,” not “woah” 🙂

    Sorry, I see so many bloggers misspell that word, I just couldn’t hold back anymore. 🙂 No offense intended!

  4. My biggest goal for this year is to use more coupons!!! For a while, we were getting free groceries and it was the most incredible thing in the world. Now that we have to pay again, I’m realizing that I was buying like $400 in groceries a WEEK! I certainly can’t spend that much of my own money so I need to make every effort to spend more like $150-$200 a week. Is that still too much? Problem is that I like I like impulse shop and I love buying new and unique grocery items for my blog.

    • Yes, you foodies tend to have big budgets. 😉 I think it is possible to cut that back (even significantly), but as always, it’s a balancing act with your other priorities, you know?

      I can never say if a budget is “too much” … the number has to make sense within your overall budget. In my classes, I ‘teach’ that it should be a function of income and commitments. If you make $2500 a month and have 5 kids, then no, you can’t really afford to spend $800 a month on food. There won’t be enough left over for everything else you need to do. But if you make $5000 a month, and have zero kids, then $800 becomes a more tenable number. Does that make sense? (Don’t forget, a percentage of your food purchases are a tax write-off, since you blog about them!)

  5. I opened the PerkStreet card for our January food bugdet – its my first month budgeting – wish me luck!

  6. Mara, thank you for sharing all of these (sometimes pretty personal) details. It’s a real learning experience for me to see how closely and carefully you adjust your budget to account for increasing expenses. Thank you for sharing. And good luck!!

    • Thanks, Rivki! 🙂 Yes, the fact that budgeting is a constantly evolving process was really news to me, and radically impacted our ability to “stick” to a budget. (Still not perfect, but much better…)

  7. Mara, thank you for sharing. I have been listening to Dave Ramsey on the radio for years, yet I still struggle with sticking to the budget. Your personal stories and advice are really helping me get on track. Thank you!

  8. I definitely understand the “cash envelope” mentality… or in your case, Mara, the ING accounts mentality for groceries. I however, have a different method, which may be good or bad…
    I use an Amex Blue card & after spending $6500 in a year (on any purchase), grocery stores (gas & drug as well) earns 5% cash back. I always pay the card in full, so as to not let interest charges eat at my rewards. And whenever I charge something, I transfer that amount (be it $2.52 or $182.96, etc.) into an ING account. When the AmEx bill comes, I make sure to transfer the balance due back into the brick & mortar checking account so that I have time enough to pay my bill online. I am therefore getting the 5% from AmEx & the ~1% from ING whil I wait for my bill…
    I hope that all made sense to you & your readers.

    • I gotcha – that makes sense. We also use our CC for convenience on many items, and pay off at least two or three times a month. But I like your idea, too. (although it is probably a lot of/too much “accounting” work for some people).

  9. “We’ll be sticking to a strict budget and paying cash..”

    While I share your goals of saving money – by paying cash you are allowing taxes to be evaded and, thus, reducing the amount available to the government to fund many social welfare programs. Whether or not you agree with what the government is doing with your tax dollars (or tax dollars accrued by services you are paying for) – allowing these taxes to be evaded is cheating.

    • I paid an invoice – cash doesn’t mean under the table, necessarily! I actually think I wrote a check, since I don’t have that kind of money laying around 🙂

      • Sorry – mt bad. Here if you pay cash it means that your workers are evading taxes…

        • No problem. Are you in Israel? I remember that there was a “mezuman” rate, but here – as long as there’s an invoice, it’s all above board!

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