Our Budget Breakdown

As I had explained in a previous post, the budget is one of the fundamental components of personal finance. A budget is essentially a roadmap that, when followed, should help you achieve your financial goals. Nicole (my wife) and I implemented our first budget a couple of years ago. Being such an important aspect of personal finance, I thought I’d share our budget breakdown. Not only will sharing help keep us honest about our spending, it might also be helpful for you to reference an example when creating your own budget.

We use Mint as our budgeting tool of choice. Mint has access to our credit card and bank account transaction data, so it greatly reduces the amount of manual work required from us. As an added benefit, Mint provides a real-time breakdown to display the spending/goal progress for each of our categories. The breakdown for the month of July, 2020 is shown below (updated through July, 27, 2020).

Mint Budget Breakdown
Our July 2020 budget breakdown from Mint as of July 27, 2020.



Our Goals

In the previous post about budgeting, I recommended that identifying goals is a great place to begin. I have mentioned before that one of our goals is to provide Nicole the option to stop working full-time when we decide to have children. To make this goal feasible, we need to generate enough passive income to partially offset her reduced salary. While there are many routes to make this a reality, we have decided that investment income is the avenue we want to take. From our experiences, earning investment income requires very little work compared to other types of passive income. Investment income includes items such as dividend payments from stocks and interest payments from bonds.

We’ve determined that supplementing Nicole’s salary with about $20,000 of passive income would require us to build the cumulative balance of our taxable investment accounts to about $572,000 (assuming an average dividend yield of about 3.5%). Using the same calculation method described in this earlier post, we would need to make a monthly contribution of about $1,150 to our investment accounts for the next 7 years (this calculation assumes a 7% interest rate and that our first child is born when Nicole is 32, which of course may not be the case). In addition to this goal, we have also calculated that we would need to contribute $7,472 annually to our retirement accounts until age 40 to achieve our goal of having $2,000,000 in our tax-advantaged accounts by the time we are 60 years old (this goal isn’t shown in our budget since the contributions are made directly from Nicole’s paycheck; read this post then this post for the calculations). I also previously noted that we intend to cover the cost of college for our children. I walked through the calculation in a prior post, and we have already started making contributions of $50 per month to lessen the burden down the road. Since we’ve established our primary goals, let’s next move into the portion of our budget that includes the basic living expenses.

Basic Living Expenses

Housing & Utilities

As is common for many people, our largest basic living expenses revolve around housing. Our largest recurring expense is our mortgage. Including property taxes and property insurance, our monthly payment is $1,435 per month. In addition to our mortgage payment, we budget about $300 per month for spending on housing-related utilities. In the utilities category we include items such as water, electricity, gas, trash/recycling, internet, and TV. I will admit that $300 would typically not be enough to cover all these expenses. We currently rent out a couple of bedrooms in our house and most of the utility costs are split with our housemates.


The second-largest portion of our basic living expenses is comprised of transportation-related expenses. While the convenience provided by a vehicle is incredible, it certainly doesn’t come cheaply. We budget about $300 per month for fuel and vehicle maintenance/repairs. We’re over budget in this category for the month of July and we’ll most likely be over the budgeted amount for the month of August too. We haven’t had the greatest luck with our vehicles recently. Last week I had part of the exhaust system on my car replaced. A few days later, Nicole’s windshield was cracked by a rock while driving on the freeway. We’ll have to make up for the overages elsewhere in our budget.

You’ll also notice that we have a category titled Car Repayment in our budget. When Nicole’s grandma no longer needed her vehicle, Nicole arranged to purchase it from her. We make a monthly payment of $200 to Nicole’s grandma. We have been making these payments for a few years and we only have $500 remaining. After the last payment is made, we won’t have any remaining car payments and we’ll be able to allocate the money elsewhere.

In addition, we account for our car insurance premiums in our budget as well. To receive a discount on our car insurance, we pay our premium semi-annually as lump sums. However, we show the expense on our budget as six equal monthly payments. This helps ensure we don’t forget about the expense during the ten months we don’t have a cash outflow. With our selected coverage levels, our semi-annual premium is about $1,000. When divided evenly, it comes to about $167 per month.


Even though I feel like I’m constantly snacking, we only budget $280 to be spent on groceries each month. We find that even at this level, we are usually able to purchase most of the items on our grocery list without worrying about going over our budget. In addition to our grocery category, we have a separate budget set up for eating at restaurants or ordering takeout. Since we don’t consider those purchases basic living expenses, I’ll discuss that category later.

Health & Fitness

The last category we include as a part of our basic living expenses is health and fitness. We budget for $100 to be spent in this category in an average month. Expenses that would typically fall into this bucket include our co-pay for doctor visits, gym memberships (not applicable given the current environment), and medication if needed. Since health issues are largely unpredictable, the actual amount spent on this category can vary quite a bit from month-to-month. We do not include our health insurance premiums in our budget since those payments are made directly from Nicole’s paycheck.

Discretionary Expenses

Now that we’ve covered our basic living expenses, we’ll next take a look at our discretionary spending categories. As the name implies, these categories include the purchases we like to make, but aren’t necessary to live. If we were forced to make an adjustment due to a reduction in our income, our discretionary items would be the first things to be cut or eliminated.


Nicole and I really enjoy traveling. When initially creating our budget, Nicole made it apparent that travel should receive the largest share of our discretionary spending. She got her way, of course. We allocate $225 to be spent on travel each month. If all or a portion of that amount doesn’t get used in any particular month, it gets rolled over to the next month (this is why some of the catergories show a negative number). By rolling the unused portion over, we are essentially contributing to a travel fund each month. We take this approach with all our discretionary categories. One of the banks we use is Ally. Ally offers a Savings Buckets tool that makes it simple to keep track of the rolled over amounts in each of our discretionary categories without actually opening a separate account for each category. With an interest rate that is quite competitive, I would definitely suggest checking out Ally’s high yield savings account if you don’t already have one.


We earmark $200 a month to be spent on miscellaneous purchases (shown as Shopping in our budget). Whether we’re buying a small gadget from Amazon, getting a new pair of running shoes, or purchasing a new outfit (cough, cough, Nicole), these types of expenses all fall into our shopping category. It took some trial and error, but we decided that $200 is a reasonable amount for this category. At $200, we are able to buy most of the things we want and we avoid making impulse purchases. For many of the purchases in this category, we take advantage of Rakuten and Honey to earn cash back. Check out the Offers page for more information.


Both Nicole and I have been fortunate enough to experience the incredible generosity of family and friends. In time, we hope to be able to pay it forward. While we currently only allocate $60 each month to be spent on gifts for others, our goal is to steadily increase that figure over the years. Rolling over any leftover amount in this category is especially important as the holiday season approaches each year.


Another category of our discretionary budget is entertainment. We have our monthly entertainment budget set to $60. If you think that figure is somewhat low, I agree. Nicole and I aren’t huge fans of nightclubs, going out for drinks, or other costly nightlife. The things that typically end up in our entertainment category are trips to the movie theater, recreational park passes (local, state, or national parks), a night of bowling with our friends, and other small treats that we enjoy. Nicole is a big proponent of reducing spending in this category a few months before we take a vacation. By doing so, we allow ourselves the flexibility to plan a few fun experiences on each trip we take.

Snorkeling Silfra in Iceland
One such experience was snorkeling the Silfra fissure while in Iceland.


The last category in our discretionary budget is for restaurants. We set our monthly restaurant budget at $60. Overall, we do a good job of eating meals at home. Buying groceries is much more economical than eating out. However, there are absolutely times when we go out to eat as a small celebration or if both of us are dreading the thought of post-meal cleanup.

Your Thoughts

Nicole and I have been working on our budget for a couple of years. We’ve made countless changes, modifications, and updates along the way. I fully expect to continue making adjustments in the years to come too.

Odds are, you aren’t going to create a perfect budget on your first attempt. It’s important to realize that’s not the objective. You build a budget to hold yourself accountable and to understand where your money is going. After all, knowledge is power. At the end of each month you should review your spending, make any necessary budget adjustments, and shift your focus to the month ahead. Being dilligent and disciplined in the long-run should provide remarkable benefits.

If you’re struggling to start or stuck part-way through, please send me an email or use the Your Thoughts page to reach out. I’d be more than happy to help.

Your thoughts are worth more than a penny.

This Post Has 7 Comments

  1. Courtney Sklba

    Noah, this was a great read. I admire the foresight you and Nicole have in making an exemplary future for yourselves. Your discipline is outstanding. I’m sure it becomes a challenge between the two of you to “outdo” your savings from the previous month 😉 Great Job!

    1. Trevor Purcell

      This is super insightful Noah and I’m excited to use this as a room in my marriage soon!

      1. Noah 5¢

        Thank you very much! Being on the same page with your spouse certainly makes a huge difference.

    2. Noah 5¢

      Thank you very much for taking the time to read the blog post! It can be challenging at times to stay dedicated, but we recognize the potential long-term rewards are worth the short-term sacrifices.

  2. Ken Nicholl

    I like the concept of a budget. It is important to know that it is a dynamic tool, however, so that you do not “sacrifice” life’s experiences. It appears that you have a plan that adjusts for such. If you keep track of the pennies, they soon become dollars….now that makes sense/cents !

    1. Noah 5¢

      Recognizing that one’s budget will change over time is certainly an important concept to grasp. Building a budget for the first time will entail some amount of trial-and-error. Over time, small decisions can have a big impact.

  3. Erin Fils

    Follow factors. Taxpayers might not be capable to benefit from the relaxed guidelines for excess business losses as a result of different coordinating guidelines, including the at-danger guidelines or passive exercise loss (PAL) rules.

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