Who doesn't like unsolicited advice by a total stranger?

We are budgeting

We are budgeting! Hurray! I can really see a budgeting trend this year. I see it I see it in many accounts I follow in Social Media and it really inspired me. We have been talking about budgeting since last year. However, we have been postponing it.

The matter of the fact is that budgeting is scary. You don’t know what you are going to find out until you do the numbers.

Although we knew approximately how much money goes in and out, we weren’t aware of how much money we need to be where we want to be in four years. It turns out that we would need to make 500 euros more per month. Or 24K in the next four years.

How did we calculate this number?

First, we analysed our yearly expenses by following this video from GoDownsize. The idea is to write down all your expenses (yearly, monthly or weekly fees, don’t forget any!). Then, once you have the total number divide it by 12. That’s how much you need to allocate per moth to your expenses. You need to deduct it from your income. The remaining is your savings.

This is an overview of our spending

  Year Month
Netflix 132 11
Taxes 650 54.16
Weekly shop 4800 400
Insurance 600 50
Car expenses 2040 170
Internet 420 35
Energy bill 600 50
Phone bill 264 22
Building maintenance 2400 200
Amazon Prime 49 4.08
Visits to family in Spain 2000 166.66
Christmas & Birthday presents for family and friends 186 15.50
Medical expenses 50 4.16
Deutsch Prufung 250 20.83
House Improvement 500 41.66
Pocket Money 360 30
Unexpected expenses 360 30
Pet 200 16.66
TOTAL 15801 1321.71

If you have debts you should calculate the annual cost of all your debts and calculate the monthly cost too.

If you know that in a few months you will start a course, include its cost on the budget. That’s for example what we did for my German courses.

We are lucky to live on a country with free healthcare. Apart from a couple of vaccines and drugs, all is covered. 50 euros is more than enough for the whole year.

The same happens with Kindergarten, starting this year is free. If it wasn’t, I would have included the costs from September to December 2018.

As home owners, we are constantly trying to upgrade our home, doing some repairs, to add resell value. We couldn’t omit this cost in our calculation.

How much do you want to save? Do you have a goal in the future?

Once we knew that our monthly expense was about 1300 euros, we made some proyections. We realized that with this ratio of expense/income, we couldn’t afford the future we wanted. The reality is that we should make 500 additional euros per month ( or 24000 in four years)

We made our first cuts

We ended our Netflix subscription. We pay 250 euros in television licensing taxes and barely watch German TV. We decided to watch some of the quality content created thanks to our taxes and not spend in Netflix or similar services.

Our first weekly shop, budget on hand, went down to 72 euros from 100.

These are only some of the changes we made to cut our expenses. I will probably talk more about this on a future post.

We are considering new sources of income

Our income was drastically cut when I quit my job. Unfortunately finding a place on a kita (a kindergarten for under three-year olds) was harder than expected. So, my return to the workforce has to be postponed for another six months. In the meantime, we are contemplating different ways to obtain some extras, like more-hours or a second job for my husband or me working on weekends or investing some of our savings.  This is something I will cover on future blogposts as it’s something we are still exploring.

Life is change

Obviously, if I get my Deutsch certificate a couple of months after my son is in kindergarten and start working, the 24K is achievable. However, we might have a second child from here to 2022 and that changes everything.  Life changes, budget changes. That’s why, we plant to follow the plan month by month and adjust when necessary. If we get to our goal sooner than expected, then we set another one. If we have a setback, we adjust.

You will be reading more on this subject as I’ll use the blog for accountability.

Are you budgeting? Do you have any word of advice?

Best of lucks!

 

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