It always seems that I have lived on a smaller budget than my peers in my career field. I paid off all my student debt (~$15k) within 6 months of graduating (my parents contributed $5k). Less than a year after that, I had maxed out my 401k ($18k) and had an additional $15k sitting in my bank account. I accomplished all of this on a salary between $60k and $70k, living in Saint Louis, Missouri.
I have wanted to write about this topic for a long time, now. Financial Independence has been a huge part of who I am. Being debt-free has changed my relationship with the world. The philosophy of Financial Independence also goes hand-in-hand with my beliefs on minimalism and environmentalism. However, I am not sure I could possibly say anything more than so many other bloggers such as Mad Fientist or my personal favorite: Mr Money Mustache.
What I would like to write about is my own personal budget. Maybe this will be inspirational, maybe defeating. Admittedly, I have a ridiculously high salary. On the other hand, my budget proves that I could live on much less.
I have also just really wanted to expose the private details of my life. Last week, I wrote about how I spend my time and I also publicly exposed my to-do list on Trello. This week I want to write about my budget and also expose the dollar figures publicly. So let us jump in.
I keep my budget on Google Sheets. Spreadsheets just provide you with so much power, but that is another topic. You can find my budget >>here<<.
Let's start with the most-detailed component of my budget. This section of my budget is for recurring or semi-recurring bills that I can track on a monthly basis.
The numbers are not perfect, but they get pretty close. For instance, my phone bill is variable because I am with Google Fi. However, it is usually less than $30/month.
In the real world, I have a bank account with Ally bank that is only for paying bills. It receives my paycheck every month, and automatically distributes out money to other accounts, leaving enough money to pay the bills every month (a little over $1,815).
At a slightly higher level, I have my Expenses sheet. This includes my Bills, and also my ideal goals for how I allocate my money.
I think this is self-explanatory. I will point out again that these numbers, except for Bills, are completely made up. I am choosing how much I would like to allocate. I can do this, because I know my Income, which I will get to in a second.
I chose $1,500 for Savings because it will allow me to save $18k per year, at minimum. This means that I can have about $80k in a retirement fund before my late 20s, which is a personal goal of mine.
My charity budget is something new. I am slowly becoming an aspiring philanthropist, and donating to charity seemed like a very easy gateway. The number is a somewhat random choice based on the money I have left after expenses.
My grocery budget has been $200 ever since I made a budget three years ago. I sometimes go over, but not often. I have actually written about my grocery budget before.
Due to tracking my Bills and other necessary expenses like Groceries, I am able to decide on how much should be in my Emergency Fund. We know that my necessary expenses are around $2,000 per month. I would also like to have a 6 month cushion. So, if I have $12,000 in my Emergency Fund, then I will be pretty safe – especially since some of my Bills are not really necessary, like Spotify.
Finally, I admit my income online.
For context, I am a Software Developer, working for a startup in FinTech, in San Francisco.
With the combined knowledge of my income and my expenses, I am finally able to get an overview of my entire financial status.
This effectively means that I can spend $2,380 every month and it will not impact my goals at all, because they are already embedded in my Expenses.
At the moment, this surplus of money is transferred to my "Spending" bank account every month. I allow myself to use it however I want during the month. At the beginning of the next month, I get another distribution of $2,380 and I put the previous remainder into savings.
This means that my default is to save money. If I do not want to save it, then I need to spend it during the month. Honestly, I am not a good capitalist, and most of the money ends up in savings every month.
Why do I not just allocate more towards Savings every month and retire sooner? This used to be my goal, but I think I might be able to do more with the money if I allow myself to spend it. This is why I have started donating to charity, as well. I could go into this topic more deeply, but I think it calls for a separate blog post.
I would love to keep writing about how I have my bank accounts set up, but I fear this post is getting too lengthy already. I hope you gained something from this post and that it did not sound like I am bragging about wealth.
I will leave you again with the link to my budget in Google Sheets. There are actually a couple more sheets that I did not talk about.
You can also view my previous budget, when I was living in Saint Louis with a smaller income and much smaller bills.