When my husband and I began to seriously consider a move into another rental while we delayed purchasing our own little house, I broke out my excel budget and started reworking the new costs and projected savings. I used the budgeting spreadsheet I created for my Newlywed Bliss Box as a start. As I compared my current rental house budget with my soon-to-be new apartment budget, I noticed that some categories, like rent, increased a bit in the total dollar cost. However, the total cost of projected utilities decreased. Though the dollar figures were staring me in the face, it was hard to compare if the new rental would be worth the stress of a move. So I created a new column on my nifty spreadsheet and decided to compare percentages of each category compared to the overall monthly budget.
What I found was that the percentages really showed me where the majority of my budgeted expenses were going: rent and utilities.
Budget based on percents
Whoa! Almost 50% of my expense is for housing and utilities (I factor in renters insurance and phones as well here.) After revising my monthly rent and assuming the cost of utilities will be significantly lower…I’m projecting here since I haven’t lived in an apartment in 5-years…my total housing hold percent increased by 1% compared to what the total house hold cost was in the rental house I was living in.
Looking at this section of my budget, the phones take up quite a hefty part of the utilities, but since my husband runs a business out of our home our two phone lines are something we’ve lowered as much as we can at this point. I could possibly move the phone costs to the business category, but since we also use them for our own personal use, it makes more sense in ‘house hold’.
The remainder of my budget is evenly divided into sections such as auto expenses, groceries, personal, savings, and business expenses that each account for about 10% of my expense budget. Not too shabby since I’m still able to squeeze about 10% into savings.
I’m sure looking at my budget percents, one would wonder why I’m not calculating those percentages based on my income rather than total expenses. In most cases, especially on steady incomes, it would make much more sense. But on a fluctuating income, where I’m living from feast to famine at any given time, it makes much more sense for me to figure out total expenditures. This way I can set aside the extra income in any one month and carry it over to the next if need be.
What I’ve noticed through my percentage-based budget is that I can see which aspects of my life are costing the most. Perhaps in the future I can realign my lifestyle to a simpler, less expensive one!
Do you calculate your expenses or income in percents or whole dollars? Which makes more sense to you? Have you found areas that seem exorbitantly expensive?
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Wow! 50% is quite a high number. But I think this is typical of many folks. The challenge is to get the percentage down to maybe 20%? Then there is more “cushion”.
.-= Mr Credit Card´s last blog ..Big Fish Games Cash Back from Citi Bonus Cash Center =-.
I’m not a hardcore PF tracker – I just use my online banking to track our transactions (we never use cash). That shows us our spending in both dollar amounts and percentages, but in my head I rely more on the dollar amount (eg I know roughyl how much we would spend in any category and easily see if we’ve gone over). Also, it only tracks SPENDING – not savings. So our 25 per cent on rent is not actually 25 per cent of our income – it’s less than that.
.-= eemusings´s last blog ..When schedules clash… =-.
My budget is a bit different than everybody elses, but in my spreadsheet I do use dollar amounts instead of percentages.
I like using dollar amounts because I can quickly contrast what I expect vs what reality is (our credit card bill has kept creeping up faster than the amount it was suppose too, it’s because of the cost of our kids…)
.-= Money Reasons´s last blog ..Funny Money – Comic 4 – Mr Penny Learning Finances =-.
If you haven’t, it might be worth calling up the cell phone company and just asking for a discount. We did that and got a 5% permanent discount off the bill.
.-= Nicole´s last blog ..Pet joys- things we like =-.
Our budget uses whole dollars but I’ve never tried looking at the percentages on paper too. I’m intrigued!
For month to month tracking we use dollar amount, but twice a year we use % when we do our reviews. I will get depressed if I see the percent amount every month
We get only 35% of what we earn. ~45% goes to taxes (including SS/MC), rest 401k, FSA etc. With our take home income, rent and charity are the most expensive areas. Hopefully they won’t increase our rent too much next year. This apartment complex we live in notorious for that.
See you tomorrow!
.-= Suba @ Wealth Informatics´s last blog ..77 Homemade gifts – DIY Christmas-Holiday gifts =-.
I have not ever really thought about the percentages. Probably because most of our expenses are pretty fixed by now (we are mid way through our mortgage and don’t plan on moving.) It is a very interesting idea though. I think I might try it just to see what it reveals.
.-= Everyday Tips´s last blog ..Miscellaneous Musings =-.
My custom household budget Excel spreadsheet also breaks out expenses by both dollars and percentage. It’s a nice way to give a little added insight into how the money is being spent – especially over a period of years.
Best,
Len
Len Penzo dot Com
.-= Len Penzo´s last blog ..Sneaky Tricks Your Grocer Doesn’t Want You to Know =-.
@Suba – That’s one big drawback of living in a rental. I’m not really sure what our new place’s take is on rent increases. I’d probably be shocked to know what we will be looking at next year!
@Everyday Tips – I tried it just to see if I could analyze my costs better. I think I’m able to see more clearly how much of my income is going toward each category instead of just a solid dollar figure.
@Len – I hadn’t thought about how easy it would be to see percentages over time. I guess that is just another benefit of looking at a budget both ways! Now I just have to remember not to write over my existing budget the next time I update it.