Budget Narrative | My Funds Matter

Budget Categories - Degree of Variability

Housing

Most housing costs are fixed for the short-term and variable in the long-term. Reducing most of these costs requires moving to a new location. That is why your choice of where to live is a critical one for the success of your budget. In the short-term, cost reductions may be achieved by reducing yard services or cleaning services. Another way to decrease your net budget in this category is to add a roommate and split overhead with that individual.

Utilities

Historically, utilities were considered as more of a fixed cost. Even with that assumption, there was a known component that was variable. Electricity, gas and water use can all be curtailed. Cell phones and internet services were not considered required services just a few decades ago, but now most people elect to have both. Subscription services, like Netflix, and cable television packages have a way of expanding and never shrinking, but in truth, they are variable. When budgets are tight, all utility usage should be critically evaluated.

Savings

The importance of savings cannot be overstated in producing a financially healthy life. Savings is a natural barrier to worry. Some of your saving may occur through your employer. For example, you may be saving in a 401 (k) or another employer sponsored plan. By having an emergency saving account you are better prepared for an unexpected expense or a reduction in family earnings. If you are saving via employer deductions, your amount in this category may be less, but savings should still be occurring each month.

Transportation

Transportation is a required, but highly variable expense. The choice to drive an expensive luxury vehicle versus a practical used car carries both practical and emotional consequences. It is important that you fully understand the choices you make related to transportation, since this is an area where many people spend more than they should. In addition, some of the costs of transportation may not come to mind when you first consider this budget line. Be sure to thoughtfully consider all related costs, such as periodic maintenance and car washes.

Food

In 2022, families in the US found that food costs are increasingly variable…and not in a good way. The costs seemingly exploded from week to week. Individuals rapidly made adjustment by eliminating some expensive items and replacing them with more affordable ones. Since food costs are highly variable (eating out versus eating at home, etc.), these costs should be fully explored to uncover potential savings.

Gifts & Occasions

Most everyone wants to be able to provide gifts for family and friends when a special occasion arrives. For that reason, these items need to be included in your regular budget. Since expenses do not occur in equal amounts each month, it is ideal to set funds aside for use in months that require larger outlays.

Children

Having children is expensive. Some of the costs associated with raising children are more variable than others. If the adults raising children are employed, child care costs are more than likely required, but costs vary considerably across the nation. If you have an infant, diapers are required, but there are cost variable among brands. Everyone wants to provide the best for their children, but doing so within a budget involves difficult decisions.