This week is dedicated to promoting financial readiness among service members and military families, and highlighting the Defense Department’s resources dedicated to keeping you fiscally fit. Here on the Blog Brigade, we’re dipping into our archives to share some of our favorite posts about budgeting, particularly those related to cash budgeting. Feel free to leave a comment or share this post if you enjoy it!
There are two types of people in the world: spenders and savers. It just so happens that I am a spender and my husband is a saver. He is the type of guy who wouldn’t set foot in any store without a clear picture of something he needs. I tend to stop in somewhere for no reason other than to get out of the house or kill time before a meeting, and I end up buying something that I didn’t even know I “needed” until I saw it.
Budgeting, for us, is a challenge, but I think many couples feel that way. Both spouses bring their own financial weaknesses and expertise to the table. To help us create financial harmony, we review and categorize our expenditures and weigh them against our income to ensure that we can always cover our necessities, save a little for a rainy day, and, if time and funds allow, have a little fun, too!
Budgeting, whether you’ve married your financial twin or your financial arch nemesis, is a hairy beast. What makes sense to your spouse might sound your organizational alarm. The following breakdown makes sense to me and (to an extent) my husband, but I’m the one writing this blog, so I get the last word in this case. Use my list as is, tweak it as you will to fit your family’s specific needs, or completely break it down and use it for spare parts in a budget model that makes sense to you!
Necessary bills. Mandatory monthly expenses, including mortgage, rent, homeowners or renters insurance, student loans, credit card payments, auto loans, utilities, and auto insurance fall under this category. Include only recurring payments that are necessary for basic needs. Don’t forget to include items that may be automatically withdrawn each month.
Food. Include your grocery expenses for the entire month. This is easy to underestimate if you fail to include those quick trips to pick up a gallon of milk or loaf of bread. So, make sure you add up every grocery bill for an accurate total. If you have infants or pets, include their food costs too.
Household and personal essentials. This category is reserved for costs of maintaining a clean and properly functioning family and home. Common expenses include cleaning products, diapers, wipes, clothing and shoes (when truly needed), hygienic products, paper goods, air filters, light bulbs, and occasional home improvement supplies. Since you most likely won’t be purchasing the same products each month, your monthly expenditures may fluctuate. Base your allowance on a three month average for a good estimate of your spending.
Medical expenses. The military community has a unique situation when it comes to medical expenses. We are fortunate to have many of our expenses covered. Even with the help of TRICARE, expenses do arise. Take into account medical, dental, and prescription costs for each member of your family, as well as each family member’s enrollment level (prime, standard, etc.). I, personally, also include veterinary expenses in this category as well. If your family has secondary insurance, factor that expense into this category too.
For more information on your medical benefits, visit the TRICARE homepage.
Savings. Set an amount each month that goes straight into savings. You may divide savings deposits into several accounts, including retirement funds, college savings, stocks, or a standard savings account.
Occasional or luxury costs. This is what I like to call fun money. You may choose to budget for these expenses or just use any leftover funds each month. Either way, these allowances include non-essential bills (e.g., memberships and subscriptions), dining out, vacations, gifts, new clothing (“just because” clothes, not necessary replacements of worn out or outgrown clothing), large planned purchases, song downloads, movie or concert tickets, new toys, etc. You may choose to spend money on some combination of these each month, or you may decide to save some or all of this allowance for several months for a larger expense, like a new television, family vacation, or a beach house (we can dream).
Annual expenses. Even though these expenses only arise once a year, or, in the case of the infamous PCS, every few years, it’s important to keep these costs in mind throughout the year. If your budget is tight each month, you may want to tuck away a small portion each month in order to prevent being strapped for cash when it comes time to pay annual property or automobile taxes, homeowner’s association fees, vehicle registration, and expenses related to a PCS, including down payments, first month’s rent, and transit expenses. You may also want to include holiday and birthday spending in this category.
If you sit down to hammer out a budget and you get the feeling that you’re going cross-eyed and your head is about to spin around, take a deep breath and visit Military OneSource for more information and resources for money management. You can even ask to talk to a financial counselor! If you are on an installation, visit your Personal Financial Management office to get some additional budget planning support.
Remember that budgeting is a process. No matter how much we’d all like to just sit down one night and set a lifelong budget, we need to reevaluate it regularly because the needs of our family change and our cost of living changes as we hop all over the country or world PCSing. When I get the urge to kick and scream over having to “save, save, save,” I just picture retirement Kristi. She would rather be sitting pretty on a beach somewhere than kicking herself for spending money on stuff that eventually wound up in the garage sale pile anyway.