Putting Together My October Budget

Photo credit: Bill, CC BY 2.0.

I don’t know if y’all read Lifehacker, but last week I did a post for them on budgeting by the individual item. This’d be the budget system I started using this summer when I realized I would have a lot of expenses and, after listing each individual expense from the Lyft ride to the airport to the meal I would eat in the airport, discovered that these expenses would take up all of my anticipated summer income.

Now I’m creating a per-item budget for October, and I wanted to show you how it works:

First, I take a look at my expected earnings chart and see how many paychecks I’ll receive in October, assuming they all arrive as anticipated. Right now it looks like I’ll get at least $5,546.27, though that number could go as high as $6,000 depending on how many people sign up for my October Hugo House class (which is, coincidentally, titled “How to Manage—and Grow—Your Freelance Income”).

But let’s start with that $5,546.27 number. I do the usual calculations:

  • Taxes get 25 percent, or $13,86.57
  • Savings get 15 percent, or $831.94
  • Everything else gets 60 percent, or $3,327.76.

Okay. Now that I’ve taken a look at every paycheck I’ll probably receive, I need to list out every expense I’ll have in October. I start with my overhead expenses: rent, health insurance, internet, food, etc. In the past, I’ve estimated these expenses at $2,000, but when I did the calculations this month I got $1,831.27. (If you eagle-eyed Friday Estimators have noticed that I’ve been making fewer grocery trips than usual… we’ll get to that later this week.)

Then I start listing my business and personal expenses for October, and here’s what I have so far:

  • Netflix: $11
  • Haircut: $50
  • Monthly Patreon pledges: $64.60
  • Alaska Airlines Visa Signature credit card balance: $529.13
  • Chase Ink business credit card balance: $62.79
  • Round-trip flight SEA-LAX for an event in November: $206.40
  • One night at the Sheraton Gateway Los Angeles Airport Hotel (YES THAT IS THE ROBOT HOTEL): $134.65
  • Box of 20 copies of my novel to take with me and sell at the event: $156.90

So far, these expenses are either recurring (Netflix, haircut, Patreon), or they’re stuff that Past Nicole bought in September and Future Nicole will need to pay off in October. (The flight and hotel, as you Monday Check-inners no doubt remember, were bought this weekend. These costs technically belong under “credit card balance” but they haven’t made it over there yet.)

October is unusual in that I don’t have a lot of individual items to add to my budget. I don’t have any meetings or trips scheduled that would require me to tally up individual Lyft rides or restaurant meals; nor do I really have any shopping planned, although it might be time to buy myself a new pair of fall/winter shoes.

But can I afford those shoes? (Or that sofa I keep putting off buying?) These expenses currently total $1,215.47, which when combined with my overhead costs gives me $3,046.74. Since my October paychecks get me $3,327.76 in spendable income after I take out taxes and savings, this means that I have roughly $281 leftover to spend—although that number could go up if a lot of people sign up for my Hugo House class.

I could spend a little more than $281 if I put it on my credit cards with the intent to pay it off in November, but I really don’t want to do that. The only reason there is a balance on my credit cards right now is because one of my projects got delayed and I didn’t get a paycheck I was expecting this month, so last week I paid the monthly statement balances in full and left the remainder until I got that check. (Yes, I could also have paid the credit cards off with my $3,000 checking account buffer, but it’s taken me long enough to pay that buffer back, so I’d rather leave it alone and wait for the check.)

But that’s how a per-item budget works—and it’s a really easy way to see how quickly expenses add up. By looking at every item I’ve already purchased (or committed to purchasing) before October has even begun, I can very quickly see how much I’ll actually be able to spend on discretionary stuff this month.

I will very happily answer more questions about this budgeting system in the comments!

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