Despite the bitter cold, January is one of my favorite times of year. A new year, full of possibilities. And a fresh new budget that hasn’t been overspent yet! As a true spreadsheet psychopath, our budget has been in the works for weeks months now, eagerly anticipating the turning of the calendar to 2021. Maybe 2021 will finally be the year we stick to the budget, realize all of our financial goals, and watch as our net worth skyrockets.
A note about our process: yes, I really did start compiling our 2021 budget months ago. When you’ve been tracking your spending as long as I have, it’s really not as monumental of a task as you might think. With a baseline of our 2020 budget, I looked at our actual spending throughout last year – where did we overspend? Was it justified by a true emphasis on the lifestyle we want to live, or was it some frivolous one-off spending during a weak moment? Once that has been sorted out, I adjust the proposed 2021 budget for any known or anticipated changes. After a couple brief budget parties with Mrs. FIby35, the 2021 budget is approved!
The Budget Breakdown
As you may recall, our 2020 budget was set at $60,000, which we exceeded by over $7,000. How would we respond in 2021? By decreasing the budget by $3,000!
Here are the details by category:
| CATEGORY | MONTHLY TOTAL | YEARLY TOTAL |
| Home | $2,259.05 | $27,108.54 |
| Utilities | $218.41 | $2,620.96 |
| Automotive | $480.21 | $5,762.50 |
| Groceries | $375.00 | $4,500.00 |
| Dining Out | $116.67 | $1,400.00 |
| Health & Beauty | $266.96 | $3,203.48 |
| Cell Phones | $16.67 | $200.00 |
| Travel & Entertainment | $369.32 | $4,431.88 |
| Pets | $119.17 | $1,430.00 |
| Work-related | $8.50 | $102.00 |
| Merchandise | $250.30 | $3,003.64 |
| Other | $269.75 | $3,273.00 |
| TOTAL EXPENSES | $4,750.00 | $57,000.00 |
The obvious question: where did we cut from 2020?
Automotive
This may not look like a decrease from the previous year, but 2020 included the final $1,200ish in payments on my car loan. With that last little bit of consumer debt finally retired, we promptly backfilled it with anticipated maintenance costs on Mrs. FIby35’s vehicle at some point this year. Shocks and struts ain’t cheap.
Dining Out
With 2021 shaping up to include more stay-at-home orders and restaurant closures, this seems like a pretty easy category to reduce for 2021. We still left some room for supporting our local establishments with pickup orders, with the hope of several brewery visits later in the year.
Other Expenses
The main reason for our ability (or hope) to cut $3,000 from our budget and over $10,000 from our actual 2020 spending lies in the fact that we have no more tuition to pay for Mrs. FIby35’s MBA program – a savings of over $5,300 from last year! This is partially offset by our anticipated income tax bill, which I calculated to be around $2,200 this year.
Sticking to the 2021 budget will allow us to accumulate a ton of savings to invest, and good times will be had by all. But if the one-off expenses come out of the woodwork again, we’ll have to resort to the Kitty.
The Kitty
A knockoff of a budgeting trick of some good friends of ours, the Kitty is essentially a series of slush funds that are increased by income that wasn’t anticipated and reduced by expenses that weren’t budgeted. There’s a Kitty for Mr., a Kitty for Mrs., and a shared Kitty for the most dire of circumstances. Basically, it’s a way to encourage additional income generation to allow for splurges on things that weren’t budgeted for in the first place. Stimulus checks? To the shared Kitty. Web hosting for this sweet new blog? Out of Mr. FIby35’s Kitty. You get the idea.
Conclusion
There you have it. I can’t say that we’ve ever successfully stuck to the original budget before, but you have to have goals in life, right? If all else fails, hopefully the Kitty will be there to save us.
How does your budget look for 2021? Any tips or tricks you and your significant other use to keep the financial peace?
