How is it already June?
While time may be flying by too fast, I always enjoy finishing off one month’s budget and having the fresh start of a new month’s budget.
As one month ends and the next begins, it’s a prime time to review your budget and financial goals, resolve to make improvements where needed, and start with a clean slate.
Instead of seeing budgeting as a chore or a punishment, I see it as an opportunity and a privilege. Rather than spending money on a whim, we can plan our spending based on our priorities. That way we will have money for the things that are most important to us, rather than spending it on whatever is in front of us at any given moment.
How do you change budgeting from a painful chore into a fun challenge?
Set goals! Having goals has turned budgeting from something dreaded into something anticipated. Whether our goal is paying off six figures of debt or saving for a fun trip, a goal gives us a reason to prioritize our spending and an outlet for enthusiasm!
If “budget” is a bad word in your house, try setting a financial goal that you’re excited about! Suddenly budgeting is an opportunity instead of an obstacle.
Budgeting is not just fun when you have excess. I have an archive of more than 10 years of budget updates showing how a goal kept us excited about budgeting even when our income was small.
But for now here are the details of our family’s May 2024 finances!
Spending in May
When we first understood the concept of living on last month’s income, it rocked our financial world in the best kind of way. If you have no idea what that means, here’s a video walk-through. Or you can read up on how you can get started.
At the beginning of each month, we start budgeting by first adding up the income we earned the month before. In May, we budget and spend what we earned in April. We knew on May 1st exactly how much money we had to work with during the month. So on May 1st, we start the May budget by taking everything we earned in April and assigning it to our May budget categories.
We can’t see the future, so on the first of May, these dollar assignments were really just best guesses and goals. We’ve been doing this for years and can make some pretty good guesses, but every month is different. Our dollar assignments at the beginning of the month almost never stay exactly the same because our needs and priorities usually change during a month.
It’s normal for our spending plan to change during the month. The important thing isn’t spending exactly how much we had guessed at the beginning of the month. It would be silly to let our May 1st guesses dictate what we can and can’t do all during the month. The important thing is to not spend more total in May than we earned in April.
If we need to spend more in one budget category than we had originally assigned, that money has to come from some other budget category. We revise the budget categories to meet our priorities during the month, but we can’t just add more money to all of them, because the total amount stays the same all month long. A changed budget is not a failed budget. A budget needs to be flexible in order to be successful!
Here’s our family’s final May spending for all of our budget categories.
Giving
Tithing – $2,134 We start out the month paying a 10% tithe on our income. Like all of our May spending, our tithing is calculated on what we earned in April, which you can see in this Budget Update. We often get questions about this. You can read our thoughts on tithing here.
Fast Offering – $100 Each month we take one day to go without food and drink (fasting) and contribute to a program that helps people who need it.
Monthly Bills
Mortgage – $2,823 We have a 15-year mortgage on our 2200 sq ft house in Northern California. We’re so thankful to have locked in our mortgage interest rate at 2.375% when we refinanced in December of 2020 (all of the details and numbers are here.) We currently have about $171,000 remaining on our mortgage.
Electricity – $6 Last year we installed solar panels on our property, a $70,000 investment that we just finished paying for recently. Our electric bill is just the $6 unavoidable fee.
Car Insurance – $126 This bill reflects a moment in time when we only have two vehicles (we donated one of our minivans and our Ukrainian family got their own policy for their car) and just before we put our 16-year-old daughter on our policy. Next month this will go back up!
Internet – $75 We have cable internet through Comcast. When we bought our home six years ago, we invested $5,000 into getting cable internet brought to our property. It has been worth it every single day since then.
Water – $65 Our water bill comes every other month. In April we set aside $75 and in May we only needed $65 more for the bill.
Garbage- $49 Like the water bill, our trash pick-up bill comes every other month, so each month I set aside the money for half of the bill.
Cell Phones – $769 We upgraded one of our phones in May which is why this category is so high (normally it’s $212). We pay for eight cell phones: five for our family, and three for the Ukrainian family that we sponsor. Our phones are all through Visible. Visible is a Verizon subsidiary that offers no-contract plans with wifi calling, unlimited cell calls, and unlimited data on the Verizon network. We’ve been using them for years. You can’t beat paying just $25 per phone each month with unlimited data.
Music – $0 Our music teacher generously offered his time and talent to teach our 11-year-old Ukrainian girl free of charge. What a blessing!
Everyday Expenses
Food – $780 I made quite a few freezer meals in May which was wonderful! In fact, we started June out with 16 freezer meals left in the freezer! We also stocked up on chicken breasts, peanut butter, and strawberries during the month.
If you need help getting your grocery spending under control, you can learn all about my strategies and method in my Grocery Budget Hero online course. Get $20 off with the coupon code STARTNOW. That puts your total cost at $39. I promise you’ll earn that back many times as you build your grocery budget hero skills.
Fuel – $1,140 Our gas spending was up significantly (over $400) from the month before. Since we donated our Odyssey at the end of April, we drove our 15-passenger van (which gets much worse gas mileage) more than we ever have before. The good news is that gas gradually creeped down during the month and a few days ago finally went below $5/gallon.
Household Misc – $437 Our miscellaneous category in May included regular household needs, stocking up on Ziploc bags at Sam’s Club, paying for digital storage, and some Amazon purchases like a desk-mounted monitor stand for Mike’s standing desk, car window break emergency tools, and a fogless shower mirror. We pay for Scribd (Everand) every month, too, so we always have lots of audiobooks on demand without having to wait to borrow them with the Libby app or pay for audiobooks individually like with other apps.
Clothing – $156 – We got new church pants for a couple of the boys, along with a couple of pairs of shoes.
Animals – $72 We got four bags of chicken feed.
Allowances – $130 We give our kids “practice money” as a weekly allowance. You can read all about why we decided to pay our kids allowance that’s not directly tied to chores, as well as all the details of when and how much in this blog post.
Sports – $15 In May we just had admission to one basketball game.
Sinking Funds
For our normal budget categories above, we take out any funds that are still left at the end of the month and send them toward our big financial goal. For example, if we started the month with $600 in our groceries budget category, but only used $520 of that, the other $80 would go toward our current major financial goal. Focusing all these extra funds from each category into one goal helped us pay off our solar panels several years early.
In contrast to the regular budget categories described above that we zero out each month, we also put money into the categories below. These are our sinking funds. Our sinking funds are categories where we set aside money for periodic expenses each month and let it roll over and build up until we need it.
The amount in bold is the amount we added to the fund this month, followed by spending notes and the current balance of each fund.
To answer a question we often get, we do not have separate bank accounts for these funds. We had separate accounts many years ago when we first started budgeting but we learned that was overkill. Instead, all of the money sits in our checking account. Since we spend according to our budget category balances, not our checking account balance, we’re not worried about getting the money mixed up. We seriously never even look at our checking account balance unless we’re reconciling the account. We track our budget categories and spending in YNAB, a budgeting tool we absolutely adore. Yes, you can adore a budgeting tool. Don’t believe me? Try it out. If you have been using Mint or something similar to manage your finances, you’ll want to read about our switch to budgeting with YNAB.
Medical/Dental – $300 added. We spent $500 on a down payment for orthodontic work for our 3rd child. Current category balance is $1,798.
Car Maintenance – $400 added. In May, we didn’t spend anything! Current category balance is $856.
Christmas – $200 added. In May, I spent $0 on Christmas 2024. Current category balance is $990.
Disability Insurance- $190 added We set aside money each month for disability insurance so that when the annual premium is due we have the money ready. If Mike is unable to do his work as an attorney due to illness or injury, this disability insurance will replace about 60% of his current income. Since our income potential is our greatest financial asset right now, we want to have disability insurance to help us protect it. Current category balance is $470.
Life Insurance – $100 added. Our life insurance premiums are due each November, so we set aside a portion of the estimated total each month which will go toward next year’s premium. Current category balance is $673.
Birthdays & Gifts – $50 added. We didn’t spend anything in May. Current category balance is $128.
Car Registration & Smog – $50 added. We spent $0 in May. Current category balance is $202.
Family Fun Fund – $100 added. We spent $111 on fishing gear for a little family backpacking trip. Current category balance is $0.
Home and Garden – $300 added. We spent $131 in total in May. We bought this spool of weedwhacker line, sweet potato starts, and a few random things at the hardware store. Current category balance is $256.
Big Trips – $4,250 added. We originally made this sinking fund to save up for a fun family trip in 2025, but we are expanding it to include a trip we will take this summer, a trip that we’ve dreamed of for over a decade. We will need to average around $1,500 per month to make both our 2024 and 2025 adventures happen. Since we had an unusually high income in April, we put a big chunk toward our trip fund. We have already spent some of the money we’ve saved to pay for flights, some accommodations, and some gear. In May we spent $571 which includes travel insurance, a short 1 hour flight within Guatemala for all of us, and some gear. Current category balance is $5,665.
Investing
Kids’ 529s – $150 added. Investing just $25 per child per month for college isn’t much, but we are okay with that. Neither of us had much college savings when we went to college, but with scholarships, grants, loans, and jobs during school we were able to get our undergraduate degrees without debt. We may contribute more later, but right now we’re happy with small, consistent contributions. I looked at the balances recently and was pleased to see that this small contribution that is barely noticeable in our monthly budget has added up to over $15,000! If you want to know more you can read about how we decided to start 529s for our kids.
IRA (Steph) – $583 added. With this same amount each month, I will reach my $7,000 IRA contribution for 2024. Mike has about $1,300 each month deducted directly from his paycheck into the state pension fund for his retirement.
New Goal!
Since we finished paying for the remainder of our solar installation back in November, we have a new financial goal (in addition to our trip goal)!
With our Honda Odyssey gone, we’ll need to find a replacement vehicle soon. Originally we were set on another 8-passenger van, but since we have our 15-passenger van for when we all go together, we might get a car instead. The most we have ever spent on a vehicle is $5,500 (the 2007 Odyssey that we bought in 2019), so our goal of $20,000 sounds like a lot!
In May, we set aside $4,250 for our new van fund. We also spent $385 on a CarFax report and two prepurchase inspections (while not at our goal, we found a couple of used cars within the amount we have already saved, but sadly both vehicles were a no-go).
With our current total of $11,027, we are 55% of the way to our goal of $20,000.
Income Earned in April- $12,711
Above you can see everything we spent in May (that we had earned and received in April.) At the same time we were spending what we earned in April, we were also (of course) earning money during May. At the beginning of June, we set up our budget to allocate spending from our May income.
This concept of getting a month ahead, has made such a huge impact on our finances! It takes some work to get to the point where you are living on last month’s income, but the effort is completely worth it!
The income section below shows the money we earned in May, which we won’t touch until June.
Attorney Income – $8,925 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, his pension contribution, and health insurance premiums.
Rental Income – $0 For years we rented out a one-bedroom apartment on our property through Airbnb. We gave that up to take in a Ukrainian refugee family for a couple of years. We loved Airbnb and will likely go back to that in the future. If you’re thinking about renting out your space on Airbnb, check out this post where I talk about how much you can make on Airbnb.
Law Firm- $0 Before working for the state, Mike did estate planning and business transactional work. Over the last few years he has had a steady stream of potential clients, most of whom he refers to other attorneys, but he still occasionally helps former clients. He doesn’t cut himself a paycheck each month, just a couple of times a year.
Blog – $1,381 I only pay myself a couple times a year now. My blogging income took a major hit when I put the blog on the back burner during Covid to start homeschooling my kids. It is slowly recovering as I put more effort into posting regularly and all of the things I do behind the scenes. Thankfully the income still covers my fixed blogging expenses (which are a lot more than most people would guess) and allows me to pay myself a few times a year.
Child Care – $803 Back in August, I started taking care of the 2-year-old Ukrainian girl while her mom goes to English school (and her siblings go to regular school). This payment also includes some stipends for training.
Tax Refund – $1,532 Until we (Mike) actually did our taxes this year, we weren’t sure if we were going to owe or not. We had to change our withholding partway through the year when we figured we had used up our credit from installing solar. We were pleasantly surprised to fins that we did not owe anything. We got our California refund last month. This is our federal refund.
Solar – $70 At our solar true-up we had a small surplus generation.
At the beginning of July come back to see how we use this income to fund June’s budget.
How’s Your Budget Working for YOU!?
That was a lot of words and numbers! Congratulations for making it all the way through our May 2024 family budget update!
Now we would love to hear from you!
Any questions on what or why we spend what we do?
What are your current financial goals?
Do you find that your budget is helping you reach your goals, or is it not working like you wish it was?
Let’s chat in the comments!
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Paivi says
Hi Stephanie
I so appreciate these updates, they are very motivating! One question, if I add up all your line items including the replacement van $$, I end up with more than the $12k you had to spend for the month. Seems I must be misunderstanding the concept of getting a month ahead perhaps? Can you elaborate? i would like to start this approach in our household but am a bit confused. Thanks!
Stephanie says
Hi Paivi! Our spending in May’s budget update (this post) is connected with APRIL’s income (see April’s budget Update). The $12K that we earned in May is what we are spending in June. Here is a blog post that explains the month-ahead concept of living on last month’s income: https://www.sixfiguresunder.com/stop-living-paycheck-to-paycheck-get-a-month-ahead/.
Deb Stevens says
Check to see if your library offers Hoopla. This app has audio books, ebooks, and movies. The ebooks must be read in the browser. The Hoopla app on the cell phone is a bit glitchy when we use it in the car via Bluetooth. Hoopla interfaces with Smart TVs in which you can add the Hoopla app. Hoopla, like Libby, is free with the library card.
Stephanie says
I’ll check it out. Thanks Deb!