For years, Austin and I lived on less than $1500 per month. My blog post showing our average monthly budget at $1500 per month is my most popular post, month after month.
Well, life has changed quite a bit since I wrote that post.
Austin finished his degree and got a job in his degree field. Because of his new job, we moved to a bigger (more expensive) city. We sold our incredibly inexpensive first home and bought one in our new location.
Our budget has increased significantly, mostly because of living in a more expensive city. So I wanted to share what our current budget looks like.
Like before, I’m still not sharing what our actual income is. Any income that we earn above our monthly budget listed below gets saved to an emergency fund, goes towards paying off debt, or gets used on house projects.
Even if we don’t earn any more money than what we budget monthly for, we can live just fine off of our monthly budget. Any extra money goes towards “extras”, if that makes sense.
How to Live on $2500 Per Month
We moved to a bigger city with much more expensive housing. Our mortgage has more than doubled! (Granted, our first home was a foreclosure which is a big reason why it was so cheap)
We’re still adjusting to the utility bills at our new house. I budget $140 for gas and electric. Since gas is higher in the winter and electric is higher in the summer, I think it will even out to about this much per month.
Big news y’all! We finally got smartphones a few months ago! We went with Google Project Fi and are super happy with it so far. We paid for our phones up front and pay $55 per month for service, which is only tiny bit more than we paid per month for “dumb phones”. We’re extra careful not to use much data. Since Austin has wifi at work and I’m always on wifi at home, it’s not too hard at all.
I’m pretty sure we don’t know how to survive without internet anymore 🙂
Health Insurance: $352
Our previous health insurance was crazy-cheap through the government tax credit because our income was so low. Our current insurance is through Austin’s work and costs a lot more. It’s good insurance though, which is nice. I don’t think too much about the cost since it comes out of his paychecks.
Dental Insurance: $10
This is also through Austin’s work.
Car Insurance: $87
We’ve shared one car since we got married seven years ago and it has saved us so much money. It’s definitely not always convenient, but we’ll keep making it work for as long as possible.
Car Payment: $175
This one pains me to write down. We try hard to not have any debt, but we took on a car payment over the winter. Our old car kept having expensive issues and it wasn’t worth the money or the stress to keep fixing it. We got a fairly inexpensive used car and are trying hard to pay off the loan as soon as possible.
We live pretty close to everywhere we regularly go, which keeps this amount low. Plus, a small efficient car helps too!
Household Stuff: $45
I like to budget separately for food and other household stuff (like razors, toilet paper, trash bags…). It’s easier for me to keep a handle on our spending when I keep these categories separate.
Eating Out / Entertainment: $100
Since moving, we’ve gone back and forth on how much to spend on eating out and entertainment. $100 seems to be a good number right now. We can go out to eat a couple of times and maybe see a matinee movie with this much. Plus, Austin goes out to eat occasionally at work which comes out of this money.
If eating out too much is a major weakness for you, find out how to break the habit!
I try to stick to $65 per week for groceries. Remember, this is just food and doesn’t include any household supplies or eating out.
The two things that help me stick to my grocery budget most are meal planning and shopping at Aldi. Here are some popular posts that will help you meal plan and stick to your budget:
- Budget Grocery List: $50 a Week for 2 Adults!
- 8 Common Meal Planning Mistakes to Avoid
- How to Eat Healthy on a Budget: 24 Healthy Foods Under $1 Per Serving
I also use Ibotta to get money back on our groceries. They have rebates for fruits, veggies, and store brand foods (just search “any” in the app to find these rebates). If you sign up with my referral link, you will get $10 added to your account when you scan a receipt for your first rebate. You may have a receipt in your wallet right now that will work.
Sinking Funds: Why They Matter
To keep our budget pretty much the same month to month, we use multiple savings accounts. Each month, money is automatically deposited into each of the separate accounts listed below. Then when we need to spend money from one of the accounts, I transfer it into our checking account.
These sinking funds help us save up all year round for Christmas, quarterly bills like our water bills, or yearly bills like our life insurance bill. Sometimes we go months without needing to do anything to our car and the money builds up. Then it’s there when we need it.
If you want more info about sinking funds, these posts will help:
- What are Sinking Funds (Definition and examples)
- 3 Ways to Create Sinking Funds (aka: the logistics)
- 18 Sinking Fund Categories You May Need in Your Budget
Water & Trash: $40
We get a quarterly water bill and transfer money into a trash collection account when needed.
This is enough to cover oil changes, small repairs, and our yearly registration fee. Any big repairs need to come from any extra money we make or our emergency fund.
Mozzie, our dog, has his own account because he’s expensive! This goes to pay for grooming, vet appointments, medication, and food.
We save $20 per month to go towards any non-Christmas gifts throughout the year, like for birthdays or Mother’s Day. It’s not a huge amount, so we usually don’t spend much on each event. You can read my list of gifts under $10 that people will love for inexpensive gift ideas.
Life Insurance: $33
This builds up until we pay the bill once a year.
We save money monthly in this account to help pay any copays that come up. We also use it for over the counter medicine because cold medicine is kind of expensive and tends to blow my budget when one of us gets sick.
We save for Christmas throughout the year so that December doesn’t become a super expensive month. It’s really nice to buy the gifts we need and then immediately be able to transfer the money to pay off the credit card! Debt free Christmas is the way to go.
The money in our house fund goes toward any small repairs. Big repairs are usually unexpected and come from our emergency fund. Bigger house projects (non-emergency ones, like redoing a bathroom) get paid for with any extra money we make above our monthly budgeted amount.
We don’t give regularly to any churches or organizations. We just give what we can a few times per year, so I like to have money set aside for that.
This is a newer category for us. We used to only buy clothes when absolutely necessary and if we had extra money. $25 isn’t a ton but we found a great thrift store to help us stretch the money. I’ve got some tips for shopping at thrift stores here.
Austin and I each get an “allowance” of $10 per month. It’s not much but we used to not have any, so it feels like a bit of a luxury. It’s enough for each of us to buy something fun or we can save it up for a few months for something bigger.
Let’s now look at our emergency fund.
Our Emergency Fund
I mentioned our emergency fund a few times but it’s not listed in our budget, so I wanted to explain. We keep a separate bank account with our emergency fund in it. Ideally, it would have six month’s worth of expenses saved up in it, but right now it’s closer to three. If our emergency fund is full, we don’t worry about it and let it sit as it is. If we need to add more to it, we do that with any extra money we make above our monthly budgeted amount.
When I first shared our $1500 per month budget, I got all kinds of comments saying, “this would never work for me because…” which is fine!
We all have different reasons for spending what we do. I think it’s important to realize that those reasons are all choices, though.
We could have spent a lot more on our house and had a much higher mortgage but we chose not to. It would be nice to have a higher allowance or a bigger grocery budget, and we probably could work that out, but our priorities are elsewhere. It can be super inconvenient to share a car but we make it work to keep our expenses down. It’s all about choices and priorities.
Each person’s budget looks very different based on location, income, health concerns, priorities… There are so many variables!
I don’t share our budget thinking that ours is the right way to do it. I share it as an example of how to live on $2500 per month.
When we first started budgeting, it was hard to find examples of real life budgets. I think it can be helpful to see how others spend their money because you can think about how you would tweak things based on your specific circumstances.
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- How I Stick to a $70/Week Grocery Budget
Feel free to ask me any questions about our budget or budgeting in general in the comments! I try to answer them all.