I decided this year that a rudimentary budget would help me further analyze my spending beyond my monthly income and expense reports. Since moving to my new apartment last July, my discretionary expenses have been increasing. Perhaps designing a spending plan and evaluating my real expenses against the budget each month will help me rein in some of that spending.
To create this budget, I examined my expenses from 2007. It’s reasonable to expect that costs for certain items, like gasoline and groceries, are going to increase. Some predictions call for runaway inflation this year, but I’m taking a more practical approach. I’m also using conservative estimates for my income. I’m forecasting a 3% salary increase in March, below my expectations, but anything can happen in the corporate environment. I haven’t included a bonus in the forecast, although I expect to receive one in February or March.
I’m also budgeting income from other sources steady at $6,000 per month. I hope that this is a conservative prediction. My goal for 2008 is to earn a total of $100,000 outside of my day job and I won’t get there earning $6,000 each month.
Keep reading this article to see my budget worksheet followed by more explanation. Clicking on the thumbnail will present a larger, more legible chart.
While most line items are consistent from month to month, I adjusted the months in which I will receive three pay checks. I also adjusted my forecast rent expense for the month I renew my lease — I’d be surprised if my rent did not go up. It may not increase 10%, but it seems like a conservative guess. The total rent budget for the year accounts for 15% of my projected income. I’m comfortable with that level of spending.
All budgeted expenses, discretionary and non-discretionary, add up to only 54% of my total projected income. This means I have a a significant portion of income not earmarked for spending. I intend to use the surplus to pay off my student loan debt this year (another one of my goals) as well as save and invest as much as possible. The surplus will also help me pay for any unexpected decisions I make this year, and I’m “expecting the unexpected.”
I’ve simplified the categories I normally use in my monthly reports in order to add flexibility and not tie myself down too much. I think I included the major categories, but this is my first attempt at creating a budget in several years. If there’s anything I’ve left out, please let me know.
6:30 pm Update: I’ve fixed calculation errors in the table, so view the graphic again if you were confused the first time.