As I write, the temperature has finally climbed back up above 0 here in Minnesota. Despite the frigidity, my keyboard has been running hot in preparation for the year that awaits us. We have some exciting plans for 2022 (stay tuned), and a fresh new budget that hasn’t been overspent yet! I won’t say which part of that I’m more excited about.
As a true spreadsheet psychopath, our budget has been in the works for weeks months now, eagerly anticipating the turning of the calendar to 2022. But first, let’s check in on how we did on our financial goals from 2021.
In last year’s budget post, I suggested that 2021 would “finally be the year we stick to the budget, realize all of our financial goals, and watch as our net worth skyrockets.”
Well, yes and no.
Stick to the budget
Absolutely not, though we did cover our extravagant overspending with unanticipated income.
Realize all of our financial goals
These weren’t explicitly documented on the blog, but we did manage to achieve all of our financial goals we set at the beginning of 2021. Despite vastly exceeding the budget, we still met our savings rate goal. Partial win.
In my How Much We Plan to Invest in 2021 (and Where) post, I outlined our investment accounts and how much we planned to contribute for the year. We were successful in maxing out all of our tax-advantaged accounts (401k, 403b, 457, HSAs, Roth IRAs) and chucked another $47,900 into our taxable brokerage account for a grand total of $138,000 in investment contributions. That far exceeded our goal of $116,700.
Watch as our net worth skyrockets
Safe to say we checked the box on this one: our net worth shot up $347,000 from the end of 2020 to the end of 2021. That’s an increase of over 44%! The S&P 500 did the heavy lifting by returning over 26%. But we did put ourselves in a strong position to take advantage, so we can take can take partial credit and count this as a resounding success.
A note about our budgeting process: yes, I really did start compiling our 2022 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 2021 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 2022 budget for any known or anticipated changes. After a couple brief budget parties with Mrs. FIby35, the 2022 budget is approved!
The Budget Breakdown
As you may recall, our 2021 budget was set at $57,000, which we demolished by over $16,000. How would we respond in 2022? By decreasing the budget by $2,000, of course!
Here are the details by category:
| CATEGORY | MONTHLY TOTAL | YEARLY TOTAL |
| Home | $1,114.27 | $13,371.27 |
| Utilities | $122.50 | $1,470.00 |
| Automotive | $350.77 | $4,209.25 |
| Groceries | $300.00 | $3,600.00 |
| Dining Out | $116.67 | $1,400.00 |
| Health & Beauty | $337.50 | $4,050.00 |
| Cell Phones | $41.67 | $500.00 |
| Travel & Entertainment | $1,386.67 | $16,640.00 |
| Pets | $110.83 | $1,330.00 |
| Merchandise | $141.12 | $1,693.48 |
| Other | $561.33 | $6,736.00 |
| TOTAL EXPENSES | $4,583.33 | $55,000.00 |
The obvious question: what’s different from 2021?
Home/Utilities, Travel & Entertainment
Our home/utilities budget has been sliced in roughly half, decreasing by $15,000.
Conversely, travel & entertainment has increased by over $12,000. Hint, hint.
Automotive
We began last year with two vehicles, one of which enjoyed our local mechanic so much that it felt the need to visit every few weeks. We have since downsized to one vehicle and do not plan on going back any time soon. Thus, our automotive budget has decreased by $1,500.
Groceries, Dining Out
The dining out budget actually remained the same, but groceries dropped by $900. Are we going to starve? What about inflation?!
Let’s just say there may be less trips to the grocery store this year and more food-related costs included in the travel & entertainment category above.
Health & Beauty, Cell Phones, Pets, Merchandise
These categories did not change significantly from 2021. We placed slightly more emphasis on health & beauty (including out-of-pocket medical and dental costs) and reduced the amount budgeted for merchandise. And our dog is now to the age where his costs are pretty stable from year to year assuming no surprise ailments.
Other Expenses
This category more than doubled from last year, mainly due to an anticipated $4,000 tax bill. I know we could increase our withholdings throughout the year to reduce how much we owe at tax time, but we prefer to keep as much money in our own pockets for the rest of the year.
New to this category is a “contingency” line item of $1,500. For, you know, contingencies if things don’t go completely according to plan. If the contingency budget gets used and one-off expenses continue to come out of the woodwork, 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. Cash from selling a piece of furniture? To the shared Kitty. Web hosting for this sweet blog? Out of Mr. FIby35’s Kitty. You get the idea.
The kitty accumulated over $18,000 in unanticipated revenue last year, which softened the blow of overspending the budget like we did.
Conclusion
There you have it. As I’ve said before, we’ve never successfully stuck to the original budget in any given year, but you have to have goals in life, right? If all else fails, hopefully the Kitty will be there to save us as it did in 2021.
How does your budget look for 2022? Am I crazy for thinking this could be the year we actually stick to ours?
Way to up the travel budget! We increased our travel budget a little bit in 2022, but overall we are sticking to the same budget we had in 2021 (which we beat by 4%). I could potentially see us going over our 2022 numbers because we are determined to travel a lot more, but hopefully we can keep our other costs down.
I think because you over spent a bit in 2021, you may be more motivated to stay within budget for 2022. Good luck on that goal!
Does health and beauty include insurance premiums or just out of pocket doctor expenses?
Health and beauty does include insurance premiums, but only for the months that it won’t be paid for out of our paychecks. I haven’t done extensive research in that area yet (to-do list for February or March), so it’s a ballpark figure at this point…hopefully I’m not too far off and we can find the coverage we need for a decent price.