Over the years, we've managed to cut many aspects of our budget down to the bare minimum…or at least close to it. It took us time to learn how to cut and where, and to determine what areas were good places to recognize some significant savings and what costs were more set in stone. However, even after all this time, I recently laid out all our family costs in order to get a better budget breakdown. In the process, I was able to get a better feel for figuring our fixed costs from frivolous in an effort to find further savings.
I really didn't realize just how many fixed costs we had and in what amounts until I laid out our full family budget. It was a surprise, and I'll admit, somewhat defeating, since there isn't much I can do to lower many of these costs.
- Health Insurance - 21.45% of total budget
- Income taxes - 20.76% of total budget
- Condo Association Fee - 9.92% of total budget
- Property Taxes - 8.19% of total budget
- Home and Auto Insurance - 2.32% of total budget
There is really nothing we can do about these particular costs since we have to pay taxes, our association fee, and health insurance (since my wife is a type 1 diabetic and we have two young children), and it's a darn good idea to have home and auto insurance. And these five costs alone account for 62.62 percent of our total family budget.
Then there are those things that are variable fixed expenses. They are there every month, but vary depending upon numerous factors, yet still are necessary in sustaining either our income or our daily lives. There are things we can do to control them, but only to a certain degree.
- Food - 8.5% of total budget
- Gas - 7.37% of total budget
- Utilities - 6.56% of total budget
- Vehicle Maintenance - 4.1% of total budget
- Medical - 2.73% of total budget
- Parking - 1.31% of total budget
These aspects of our budget account for another 30.57 percent of our total budget.
Areas like utilities, we've managed to cut through things like downsizing, unplugging electricity "vampires" (items that continue to use electricity when plugged in but not in use), using natural elements to heat and cool our home (sun, shade, wind), and similar adjustments to lifestyle. And we could cut our costs in this area further by riding ourselves of cable television, but really, when it comes down to it, $70 a month is a small price to pay for the hours of entertainment we receive from family programming, movies and sporting events on television.
And of course, we could cut the cost of gas, vehicles maintenance, and parking by eliminating our vehicle, but that would raise a litany of issues such as my wife getting to and from work, how to get to the store, and similar problems. My wife is looking into working closer to home though, which could save us substantially on gas and vehicle maintenance though -- upwards of $2,500 a year or more possibly.
This leaves us with about 7 percent of our budget with which to work on cutting.
- Vacation - 2.73% of total budget
- Entertainment/Clothing - 2.43% of total budget
- Kids - 1.64% of total budget
By doing things like reducing our number of dinners out, buying much of our clothing at resale shops, making use of low-cost outdoor entertainment venues, and vacationing with family and friends, we've managed to keep our discretionary spending to a minimum. While it's a great thing that this portion of our spending only accounts for about 7 percent of our total budget, it also makes it difficult to find further reductions in our spending. It does however tell me one critical thing; that it's time to move on from a focus on cutting costs to one that centers upon increasing income.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
- Personal Budgeting
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