I really should know the answer to this, for as long as we have been anal-retentive in tracking our budgeting and spending, but alas the answers elude me.
First: we keep a separate savings account for our 1.75 year old daughter's expenses. We throw in a few bucks every month for diapers, clothes, shoes, contributions to her UGMA, whatever. We count this money as part of our savings rate. Is this a bad idea? Should we count it as money spent? For the money that we have already counted as saved, how do we track the spending once we do decide to spend it. Say there is a sale on diapers so I stock up and spend $100 from her account. Do I just ignore it and not track it at all in my monthly budget? Do I count it as income for that month that I then spent? How should I deal with this?
It's important for me to track that because we live on one income in an extremely HCOLA and we have a 30-40% savings/debt reduction rate. We are trying to pay off our remaining $80k of student loans in 3-4 years, so every dollar counts over here in the FSW household. We literally have to account for every dollar in our monthly budget.
Second: despite all our budgeting prowess, the concept of living on last month's income just revealed itself to us and we implemented it in February. Excuse me while I take a moment to feel proper shame at how long it took us to do that. So for January, we received our two paychecks (paid Mr. FSW is paid every other week) that month and we spent them that month. In February, we received his two paychecks and we put them in our savings account and said "here is our money for March." To cover February expenses, we lived out of our emergency fund for one month. We used our sizable tax refund to rebuild our emergency fund to the level it was at in January. So my question is, what was my savings rate for February?
Stats:
Transferred from E fund to cover Feb expenses: $4200
Paychecks saved for March expenses: $4288
Tax refund: $5387
Debt payment: $750
Savings: $4854
Everything Else: $3983 (I have a very detailed expense report I won't include)
Pretax TSP contribution w/matching: $672
So my question is what do I count as income for February? The $4200 from savings was already counted as income when we received it and saved it. The paychecks we receviced this month are being saved for March and will be considered March's income. The tax refund is definitely income. So on my awesome spreadsheet, what do I put under my columns of "Income", "Income Minus TSP", "Savings", and "Savings Rate"?
Am I doing everything wrong? How do I get accurate stats for this month? Thanks for your help!
