What’s Included in Our Family Budget (and What’s Not)
Over the years, we’ve gone through lots of iterations of our budget. Here’s a peek at what we’re currently tracking.
Income
We keep things broad here, just one main income category. It includes:
Mike’s full-time salary (88% of our income): Two paychecks a month. These paychecks cover the majority of our expenses.
Jill’s business income (12% of our income): I pay myself a small salary once a month, roughly half of my average monthly earnings.
Interest income (0% of our income): We have two main savings accounts. Occasionally we’ll pull interest from them if we have a bigger purchase or need to cover something unexpected. Back when we were adjusting to me stepping away from full-time work, this helped cushion the transition. These days, we mostly let the interest hang out in savings and it’s not included in our regular budget, it’s just there if we need it.
Other income (0% of our income): Anything outside of our paychecks and interest. This might be a birthday check, an escrow refund, or even cashback from Rakuten. Similar to interest income, we don’t include this category in our regular budget.
Expenses
We break out expenses into four main areas:
Monthly bills & utilities (things we pay every month)
Irregular bills & utilities (paid quarterly, annually, or on some other schedule)
Food & dining out
Flexible spending (everything else)
Our income dictates how money is available for each expense category.
Monthly Bills
These are straightforward and budgeted individually. They include:
Mortgage: 30% of our expenses
Utilities (electric, gas, internet): 4% of our expenses
Life insurance: <1% of our expenses
Doctor-related bills: 2% of our expenses
Subscriptions (Kindle Unlimited, Netflix, Disney+/Hulu): <1% of our expenses
Irregular Bills
These get budgeted by dividing the total bill by the number of months in the billing cycle. For example, a $150 annual bill becomes $13/month (rounded up) in the budget. A $90 quarterly bill becomes $30/month.
Categories here include:
Utilities (water every other month; garbage/recycling/pest control quarterly; phone annually): 3% of our expenses
Car expenses (insurance every 6 months; AAA, personal property tax annually; registration every couple years): 3% of our expenses
Memberships (Amazon, Costco, our community pool annually): 1% of our expenses
Subscriptions (Oura, Monarch Money, Google One annually): <1% of our expenses
Preschool (Sept–April, this will get dropped next year when H starts Kindergarten): 5% of our expenses
Student loans (currently sitting in this section of our budget since they’ve been in deferment, but I probably need to move them back into monthly bills): 3% of our expenses
Food & Dining Out
This group only has two categories: groceries and dining out. We keep them pooled together. Usually if one runs high, the other is low. Since we don’t eat out much, groceries make up the bulk. Food and dining out account for 26% of our expenses.
Flexible Spending
This is the big catch-all group for variable expenses:
Home improvement
Kid activities
Medical/dental visits
Clothing
Entertainment
Travel
Gifts
…basically, anything that doesn’t fit neatly elsewhere.
Even though it’s one large “pool,” Monarch still categorizes transactions. That means I can see how much we spent on clothing or travel in a given month (or over time), without having to shuffle money across categories when something unexpected pops up. Our flexible spending pool accounts for 22% of our expenses.
Surplus
We also have a “surplus” section that isn’t officially part of the budget, but comes in handy for one-off bigger purchases. It’s basically a way to keep track of savings earmarked for things outside our normal categories.
What’s Not Included
My business income and expenses live in a totally separate system. Those accounts and budgets are separate from our family finances.
Cash payments don’t show up in our budget. The transaction to take out money at an ATM will show up but we don’t track what we do with it (unless we know what we’ll use the funds for). We rarely use cash so this doesn’t happen often.
