Here’s to another year of sharing our family’s budget details with the world in hopes of helping as you work on getting a handle on your own family finances.
I had planned on making changes to the way we share our budget with you, but when it came down to it, I couldn’t think of how I wanted to change the information included and presentation. Less explanation? More explanation? More tables and graphs?
If you have suggestions about our budget update format, I’m happy to hear them. Just comment below or send an email. After all, I share all of this to help each of you with your own budgeting and financial journey.
If you’re a regular reader, feel free to scroll past the explanatory paragraphs and get right to the numbers and explanations that do change each month.
This new year is going to have some major changes for our budget. Here’s a sneak peek of what we know is in store for 2026 (surely there will be lots of surprises as well):
- Our mortgage payment will be increasing by $1,045 starting in March thanks to our homeowner’s insurance nearly tripling. 😭
- Our oldest child will be graduating from high school, then attending college in the fall.
- We will be putting a permanent house on our investment property and starting to rent it.
In this update I’ll share our spending from January which includes our savings goals. Then I’ll go over the income that we received in January, which we saved for funding February’s budget. Let’s go!
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 have no idea what that means, here’s a video walk-through. Or you can read up 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. We knew on January 1st exactly how much money we had earned and received between December 1 and December 31, so we knew exactly how much we could spend between January 1 and January 31. 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 are really just our best guesses and goals. We’ve been doing this for years and can make some pretty good guesses, 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 usually change during a month.
It’s normal for our spending plan to change as we move through the month. The important thing isn’t spending exactly how much we guessed we might spend in each budget area 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 – $1,590 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. 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.
Other Giving – $100 We are setting some money aside each month to purchase additional supplies to donate to Cuba. We have been gathering supplies, collecting donations, and have an Amazon wish list that includes really helpful things like these and these.
Monthly Bills
Mortgage – $1,953 Our mortgage is $2,453 each month, and our Ukrainian neighbors contribute $500 per month. In the past I called this contribution “income,” but it really isn’t since it doesn’t even cover their utilities and insurance cost. Going forward, I will apply it directly to our mortgage budget category to reduce what we pay out of pocket for our mortgage. 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 (details of that here.) We currently have $135,711 remaining on our mortgage.
Here’s our mortgage payoff goal tracker house which I need to update (you can get your own copy in my shop)!
Electricity – $16 Three years ago we installed solar panels on our property, a $70,000 investment that we finished paying for last year. Our electric bill is just the unavoidable fee (which has gone up) for most of the year, then in December we have our “true-up” which is the difference between what we’ve used and what we’ve produced over the year. I’m working on writing up a detailed analysis of whether solar was worth it for us. I was hoping to have it published by now, but I passed it onto Mike who is both busy and devoted to details.
Car Insurance – $502 We have four vehicles with two adult drivers and two teen drivers. This cost reflects the big increase in premium when our newest driver, a 16-year-old boy, was added.
Internet – $110 We have cable internet through Comcast. When we bought our home eight years ago, we invested $5,000 to have Comcast extend cable internet to our property. It has been worth it every single day since then, even though the cost for internet service went up recently.
Water – $75 Our water bill comes every other month. I try to set aside half of what I expect the bill to be.
Garbage- $60 Like the water bill, our trash pick-up bill comes every other month, so each month we set aside the money for half of the bill. The cost seems to go up several times a year.
Cell Phones – $100 After two years of paying for the cell phones for the Ukrainian family that we sponsor, they are now paying their own cell phone bills, which leaves us with 4 phones in our family. Mike is on the annual plan, so we only pay 3 phone bills per month, though I started putting his $25/month here too so that when his annual plan renews, there will be a chunk here in this category. Our phones are all through Visible. Visible is a Verizon subsidiary that offers no-contract plans with wifi calling, unlimited cell calls, and unlimited calls and 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.
Gym – $60 For the first time in our lives, we joined a gym last year. Our teenagers were extra excited, since it’s a small local gym that many of their friends go to. We hope that investing in our fitness now will make life better now and for years into the future.
Everyday Expenses
Food – $830 We are a family of 8 including 3 athletic teens. We primarily buy ingredients and cook at home, rather than eating out or buying convenience food. If we do get pizza or anything like that, it goes in this category since we don’t have an “eating out” category in our budget. 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. Right now it’s available with pay-what-you-can pricing!
Fuel – $507 Gas prices are still down at our lower winter prices. At the cheapest gas station, gas prices have been right at $3.99, but everywhere else is well over $4.
Household Misc – $259 This includes our normal toiletries, household things, and subscriptions. In January, we got some of these because our kids have been prospecting (with good luck!) in the creek on our new property. We had to buy a couple of new chainsaw chains at the local hardware store. Unfortunately working out on the property also means we need to keep this on hand.
Clothing – $55 – We bought wrestling shoes for our second grader. Thankfully I found some great ones on eBay for a fraction of the cost of new ones. At his age, kids wear their wrestling shoes for about 6 weeks during the wrestling season and then by the next year they have outgrown them. We also ordered custom shirts for our oldest’s basketball senior night. They were individually designed for each girl with lots of their photos and were pretty pricey. After shipping, it was over $70 for the two shirts. We returned a few clothing items bought during the holidays, so that helped offset some of the clothing spending in January.
Animals – $0 We didn’t have any animal expenses in January. I don’t know if I mentioned it here, but we lost most of our flock of chickens a few months ago to predators, so we’re down to just two hens.
Allowances – $157 We give our six 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 – $28 We have a season pass for high school home games, but we have to pay for away games and playoff games.
Sinking Funds
For our regular 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 $800 in our food budget category, but only used $720 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 law school debt years earlier than we thought possible.
In contrast to the regular budget categories 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. I recently wrote a whole article about how to get started using sinking funds (and why you should).
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 EveryDollar or something similar to manage your finances, you’ll want to read about our switch to budgeting with YNAB.
Medical/Dental – $500 added. We spent $86 in January. Current category balance is $3,661.
Car Maintenance – $400 added. We didn’t spend anything here! Current category balance is $4,170.
Christmas – $200 added. We started our 2026 Christmas fund and didn’t spend anything yet. Current category balance is $200.
Disability Insurance- $190 added We set aside money 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 have disability insurance to help us protect it. The balance is usually due in March. Current category balance is $2,052.
Life Insurance – $125 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. Current category balance is $250.
Birthdays & Gifts – $75 added. We didn’t have any spending here in January. Current category balance is $283.
Car Registration & Smog – $50 added. We didn’t have any expenses here. Current category balance is $320.
Family Fun Fund – $2,055 added. This is the category where we’re finishing our savings for our upcoming family trip to Cuba. We used Christmas savings and other funds last year to pay for the flights and accommodations, so that is already covered, but we need to save about $7,000 more before we go. I’ll share our trip budget soon. Current category balance is $2,736.
Home Improvement – $1,500 added. We started an emergency bathroom project at the end of November that involved completely gutting our kids’/guest bathroom. We haven’t made it very far yet, but it will be a DIY project that we hadn’t planned on or budgeted for. We spent $559 on the project in January, though we didn’t get a lot of work done because a new development with our investment property took all of our time and energy. We’re definitely far from done spending time and money on this, but it will have to wait a little longer. Current category balance is $941.
Swim Team 2026 – $100 added. Last year I started a sinking fund to start saving up for summer swim team. It will be nicer to have the money all set aside when the early spring registration rolls around next year rather than having to come up with $1,200 in the month it’s due. Current category balance is $1,000.
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 pleased to see that this small contribution that is barely noticeable in our monthly budget has added up and grown to over $26,000! If you want to know more you can read about how we decided to start 529s for our kids.
IRA (Steph) – $625 added. With this same amount each month, I will reach my $7,500 IRA contribution for 2026.
Investment property – $1,754 We recently bought an investment property. Right now we are putting money into it, including paying the mortgage until it gets to the point where it covers its own expenses. The amount listed here is the money that came out of our family budget to go toward the new property. Our monthly costs on the property includes the mortgage payment of $2,339 and the cost of trash service and internet. We get $700 from our RV renter that goes toward this and we cover the rest from other funds until we get a permanent rental home on the property.
Income Earned in January- $12,849
The categories above show everything we spent and saved in January, which was using the money we had earned in December. At the same time we were also earning money during January. At the beginning of February, we set up our budget to allocate spending from this January income. I’ll share that spending in March.
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, and will use (or have used) in February.
Attorney Income – $10,654 Mike works as an attorney for the state of California. This was his take-home pay after taxes, social security, his pension contribution, and health insurance premiums.
Law Firm- $1,750 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 write himself a paycheck each month, just a couple of times a year.
Blog – $0 I only pay myself a few 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.
Child Care – $445 For the past two years I have been taking care of the 4-year-old of the Ukrainian family that we sponsor. There is a community organization that pays for childcare while the mom is at work. It’s much less expensive and more convenient to have her stay with me than to bring her to a standalone child care facility.
Come back next month to see how we used this income to spend and save in 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 2026 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?
What would you like to see in our future budget updates?
Let’s chat in the comments!
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