January 2024 Family Budget Update

We’re back with a fresh 2024 budget! It might look very similar to last year, but if it ain’t broke, don’t fix it, right?!

While the general budget hasn’t changed a lot with the new year, we have a new goal to work on. I can’t overstate the importance of setting financial goals. If you don’t have firm financial goals, your money will slip through your fingers and you won’t know where it went. Any extra funds will get swallowed up without anything to show for it.

If you’ve never set financial goals before, now is a great time to start! Even slow progress is still progress. The time will pass whether you have goals or not. At the end of the year, you’ll be so glad that you decided to start those financial goals today! You can do this!

As a reminder, the numbers below are our actual numbers, so your budget will look different but the principles are the same.

• Budget the money you actually have, not what you expect to have in the future.
• Allocate your money according to your priorities.
• If you want to overspend in one category, it has to come from another category so that you don’t spend more than you have.

Let’s dive into our family’s January 2024 finances!

Spending in January

When we first understood the concept of living on last month’s income, it rocked our financial world in the best kind of way. If you don’t know what I’m talking about, this video will tell you all about living on last month’s income  and how life-changing it is. Or you can read this article on how you can get started.

At the beginning of each month, we start budgeting by first adding up the income we earned the month before. In January, we budget and spend what we earned in December. We knew on January 1st exactly how much money we had to work with during the month.  So on January 1st, we start the January budget by taking everything we earned in December and assigning it to our January budget categories.

We can’t see the future, so on the first of January, these dollar assignments were really just best guesses and goals. We’ve been doing this for years, so we have a lot of history we can rely on, but every month is different.  Our dollar assignments at the beginning of the month almost never stay exactly the same because our needs and priorities often change during a month.

It’s normal for our spending plan to change during the month. The important thing isn’t spending exactly how much we had guessed at the beginning of the month. It would be silly to let our January 1st guesses dictate what we can and can’t do all during the month. The important thing is to not spend more total in January than we earned in December.

If we need to spend more in one budget category than we had originally assigned, that money has to come from some other budget category. We revise the budget categories to meet our priorities during the month, but we can’t just add more money to all of them, because the total amount stays the same all month long. A changed budget is not a failed budget. A budget needs to be flexible in order to be successful!

Here’s our family’s final January spending for all of our budget categories.

Giving

Tithing – $1,136 We start out the month paying a 10% tithe on our income. Like all of our January spending, our tithing is calculated on what we earned in December. You can see December’s Budget Update here. We often get questions about this. You can read our thoughts on tithing here.

Fast Offering – $100 Each month we take one day to go without food and drink (fasting) and contribute to a program that helps people who need it.

Monthly Bills

Mortgage – $2,823  We have a 15-year mortgage on our 2200 sq ft house in Northern California. We’re so thankful to have locked in our mortgage interest rate at 2.375% when we refinanced in December of 2020 (all of the details and numbers are here.) We currently have about $176,000 remaining on our mortgage.

Electricity – $6 Our electric bill has normally been just the $6 unavoidable fee. Last year we installed solar panels on our property, a $70,000 investment that we just finished paying for last month. For part of the year we produce more than we use, so we will also have some credit toward our bills this winter when we won’t produce as much because of the shorter, cloudy days.

Car Insurance – $209 Our car insurance went up significantly when we got a 15-passenger van so we could drive ourselves (8) and our Ukrainian refugee family (4) together in one vehicle. See this post for details. With 12 people in the household, each with their own appointments and activities, we’re also driving a lot more miles and more miles means higher auto insurance premiums.

Internet – $70 We have cable internet through Comcast. When we bought our home six years ago, we invested $5,000 into getting cable internet brought to our property. It has been well worth it every single day since then.

Water – $0 Our water bill comes every other month, but we set aside enough for the entire bill last month. It’s nice to see the bill total coming now down!

Garbage- $52 Like the water bill, our trash pick-up bill comes every other month, so each month I set aside the money for half of the bill.

Cell Phones – $187 We pay for seven cell phones: four for our family, and three for the Ukrainian family that we sponsor. They are all through Visible. Visible is a Verizon subsidiary that offers no-contract plans with wifi calling, unlimited cell calls, and unlimited data on the Verizon network. We’ve been using them for years. You can’t beat paying just $25 per phone each month with unlimited data.

Music – $0 Our music teacher generously offered his time and talent to teach our 11-year-old Ukrainian girl free of charge. What a blessing!

Everyday Expenses

Food – $655  Our grocery spending is just for our family of 8  because the Ukrainian family receives income-based food assistance now. We eat at home almost exclusively; we don’t go out to eat or get takeout. We keep a well stocked pantry and freezer, as well as long term food storage.

If you need help getting your grocery spending under control, you can learn all about my strategies and method in my Grocery Budget Hero online course. Get $20 off with the coupon code STARTNOW.  That puts your total cost at $59. I promise you’ll earn that back many times as you build your grocery budget hero skills.

Fuel – $800 I get excited whenever our monthly gas cost are under $1,000. Right now gas is $4.15/gallon at the cheapest spot.

Household Misc – $470  In addition to normal household necessities, we paid for cloud storage, bought a hole saw for putting in new lighting, a new tripod (all of our others were missing pieces), and sturdy candy thermometer (we have broken so many of the plain glass ones).

Clothing – $48 – We found a few great deals at Sam’s Club on clothing at the end-of-season.

Animals – $66 We bought chicken feed and dog food.

Allowances – $130 We give our kids “practice money” as a weekly allowance.  You can read all about why we decided to pay our kids allowance that’s not directly tied to chores, as well as all the details of when and how much in this blog post.

Sports – $87 We paid $75 for one of our boys to participate in middle school wrestling. We also paid $12 to attend one of our daughter’s away basketball games since our season sports pass only covers home games.

Sinking Funds

For our normal budget categories above, we take out any funds that are still left at the end of the month and send them toward our big financial goal. For example, if we started the month with $600 in our groceries budget category, but only used $520 of that, the other $80 would go toward our current major financial goal. Focusing all these extra funds from each category into one goal helped us pay off our solar panels several years early.

In contrast to the regular budget categories described above that we zero out each month, we also put money into the categories below. These are our sinking funds. Our sinking funds are categories where we set aside money for periodic expenses each month and let it roll over and build up until we need it.

The amount in bold is the amount we added to the fund this month, followed by spending notes and the current balance of each fund.

To answer a question we often get, we do not have separate bank accounts for these funds. We had separate accounts many years ago when we first started budgeting but we learned that was overkill. Instead, all of the money sits in our checking account. Since we spend according to our budget category balances, not our checking account balance, we’re not worried about getting the money mixed up. We seriously never even look at our checking account balance unless we’re reconciling the account. We track our budget categories and spending in YNAB, a budgeting tool we absolutely adore. Yes, you can adore a budgeting tool. Don’t believe me? Try it out. If you have been using Mint or something similar to manage your finances, you’ll want to read about our switch to budgeting with YNAB.

Medical/Dental – $300 added. We let the money remaining in our medical/dental sinking fund rollover from last year. In 2023 we didn’t meet our health insurance deductible, which is definitely something to be grateful for.  With an emergency surgery and hospital stay for one the boys early in January 2024, it looks like we may not be so lucky this year 😆. We won’t see our final costs for a while, but we spent $23 on an initial doctor copay and a prescription during January. Current category balance is $1,546. 

Car Maintenance – $750  added.  In January Mike bought the parts needed for a few repairs (power steering reservoir, automatic doors) on our Honda Odyssey. We also got new windshield wipers for both mini vans. Current category balance is $826.

Christmas – $200 added. We are starting again with our Christmas fund. We had $12 left at the end of December and I bought a few clearance things in January. Current category balance is $204.

Disability Insurance- $190 added We set aside each month for disability insurance so that when the annual premium is due we have the money ready. If Mike is unable to do his work as an attorney due to illness or injury, this disability insurance will replace about 60% of his current income. Since our income potential is our greatest financial asset right now, we want to have disability insurance to help us protect it. Current category balance is $1,927.

Life Insurance – $100 added. Our life insurance premiums are due each November, so we set aside a portion of the estimated total each month which will go toward next year’s premium. We had a $73 remaining after paying last year’s premiums. Current category balance is $273.

Birthdays & Gifts – $50 added. We spent $32 in January for gifts.  Current category balance is $31. 

Car Registration & Smog – $60 added. We spend $145 on registration in January. Current category balance is $2.

Family Fun Fund – $1,015 added. We added a lot to this category knowing in February, we will be paying for summer swim team for most of the kids. We spent $140 in January on our Disney+ subscription, a steep price increase in the past two years!  Current category balance is $953.

Home and Garden – $266 added. We spent all of the money from this category on some supplies for a few minor home repairs. Current category balance is $0.

2025 Trip – $647 added. We have top secret plans for a family adventure in 2025, so we made a separate budget category for it. We’re aiming to add $500 each month either through our normal budget or other means. In January, all of the money added to this category came from credit card points ($47) and bonuses from opening a new savings account and an extra bonus for opening both a checking and savings account ($600).  Want to do this too? You can get a $300 bonus when you open a Chase checking account online and set up direct deposit within the first 90 days. Current category balance is $1,767.

Investing

Kids’ 529s – $150 added. Investing just $25 per child per month for college isn’t much, but we are okay with that. Neither of us had much college savings when we went to college, but with scholarships, grants, loans, and jobs during school we were able to get our undergraduate degrees without debt. We may contribute more later, but right now we’re happy with small, consistent contributions.  I looked at the balances recently and was please to see that this small contribution that is barely noticeable in our monthly budget has added up to over $15,000! If you want to know more you can read about how we decided to start 529s for our kids.

IRA (Steph) – $583 added. With this same amount each month, I will reach my $7,000 IRA contribution for 2023.  Mike has about $1,300 each month deducted directly from his paycheck into the state pension fund for his retirement.

New Goal!

Since we finished paying for the remainder of our solar installation back in November, we are ready for a new financial goal!

We will need to replace one of our vehicles (our minivan that seats 8) soon, so saving for that will be our new goal! We are setting our goal at $20,000 for now, though we may choose to go with an older van, which would be less expensive.  The most we have ever spent on a vehicle is $5,500 (a 2007 Odyssey that we bought in 2019), so $20,000 sounds like a lot!

In January, we set aside $800 for our new van fund. With our total of $800, we are 4% of the way to our goal of $20,000.

Income Earned in January- $9,904

Above you can see everything we spent in January (that we had earned and received in December.) At the same time we were spending what we earned in December, we were also (of course) earning money during January. At the beginning of February, we set up our budget to allocate spending from our January income.

This concept of getting a month ahead, has made such a huge impact on our finances! It takes some work to get to the point where you are living on last month’s income, but the effort is completely worth it!

The income section below shows the money we earned in January, which we didn’t touch until February.

Attorney Income – $9,904 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, his pension contribution, and health insurance premiums.

Rental Income – $0 For years we rented out a one-bedroom apartment on our property through Airbnb. We gave that up to take in a Ukrainian refugee family for a couple of years. We loved Airbnb and will likely go back to that in the future. If you’re thinking about renting out your space on Airbnb, check out Mike’s post about dealing with insurance for your Airbnb rental or our explanation of how we handle our Airbnb finances.

Law Firm- $0  Before working for the state, Mike did estate planning and business transactional work. Over the last few years he has had a steady stream of potential clients, most of whom he refers to other attorneys, but he still occasionally helps former clients. He doesn’t cut himself a paycheck each month, just a couple of times a year.

Blog – $0  I only pay myself a couple times a year now. My blogging income took a major hit when I put the blog on the back burner during Covid to start homeschooling my kids. It is slowly recovering as I put more effort into posting regularly and all of the things I do behind the scenes. Thankfully the income still covers my fixed blogging expenses (which are a lot more than most people would guess) and allows me to pay myself a few times a year.

At the beginning of March come back to see how we use this income to fund February’s budget.

How’s Your Budget Working for YOU!?

That was a lot of words and numbers! Congratulations for making it all the way through our January 2024 family budget update!

Now we would love to hear from you!

Any questions on what or why we spend what we do?

What are your current financial goals?

Do you find that your budget is helping you reach your goals, or is it not working like you wish it was?

Let’s chat in the comments!

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