Given the tsunami of bad on Wall Street right now, it seems a little odd to be blogging about how we’re going to rebuild ourselves a safe haven with savvier saving, budgeting, and investing. Kind of like hammering away on the frame of a house in the middle of Hurricane Ike.

But, not everyone can tap the government for an $85 billion loan. So, I give you Cash Wife and Cash Husband’s first real budgetary exercise. And it looks something like this:

Pie In Your Eye Chart

The other night we sat down with six months of expenditures and all our other financial income to see how we’re doing according to the 60 Percent Solution, an approach to budgeting that Richard Jenkins over at MSN Money came up with and that MP Dunleavey includes in her “Money Can Buy Happiness” book.

Jenkins found he needed a big-picture way to keep track of where money was going up or down in the budget. If you’ve ever tried budgeting, you’ve probably felt the frustration, as he puts it, of “too much detail and not enough bottom line.” So he came up with this system, based on your gross income:

60 Percent of your budget (gross income) goes to (from the article linked above):

Committed expenses:

• Basic food and clothing needs.

• Essential household expenses.

• Insurance premiums.

• Charitable contributions.

• All of our bills — even such non-essentials as our satellite TV service.

• ALL of our taxes.

The remaining 40 percent goes to:

Retirement savings/debt — 10 percent.
Long-term savings for things like replacing a furnace — 10 percent.
Short-term savings for irregular expenses that always pop up — Christmas, birthdays, somebody’s wedding — 10 percent.
Fun money — 10 percent.

Here’s where we’re at now:

Committed expenses: 79 percent. Yes, seven-nine.
Retirement: 6.7 percent.
Long-term savings/debt: 9.7 percent.
Short-term savings: 5.5 percent.
Fun money: 5.3 percent.

You can see why it’s taken me a few days to post. Talk about a double-kapow of whopping headache and exhaustion. Remember what I said about retirement? That we don’t have to be saving more at this point? Wrong, according to this.

Of course, this is just a tool and we don’t have to hit these percentages exactly. But figuring this out was a good kind of pain.

And here’s the cool part. The next night, we (and “we” here means my better half) plugged all of this stuff into Mint.com.

I had said, “You know, what I need is something that has all our account information in one place, where I can see it.” Cash Husband said, “Here, look at this Quicken software free trial.” I said, “Okay, but check out this Mint site because I think it’s free.” I then did not check out Quicken and did something else, probably related to bringing home the bacon. Or at least the bacon drippings. Cash Husband proceeded to set up Mint.

So now our checking, savings, retirement accounts, kids’ 529 plan, etc., are all in one place, and instantly updated.

Super, super cool, because everything goes into pie charts, which is the only way that money (or math of any kind, really) makes sense to my brain. Just click, and you can see one month of where your money is. Or three months, etc. Click on any pie slice for the gory details of what your money is doing. After we’ve got enough data in it, we’ll be able to see (in bar graph–I like those, too) how our spending stacks up against other people.

So, no solutions yet (ideas for cutbacks, yes), but at least, as CH says, we’ve cleaned out the fridge.

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Tags:   60 percent solution · committed expenses · Mint.com · pie charts4 Comments