Do You Have A Budget?
Do you know how much money you spent on groceries in January? Do you remember how much you paid for all of the gifts you bought last Christmas? How much did you spend on your cars in February? If you have a budget, you could give me those numbers no problem. If you don't have a budget, probably not.
April is financial literacy month so I thought we should talk about budgets. Do you have a budget? Do you make one every month? Do you write it in an old notebook? Do you do it in an Excel spreadsheet? Maybe you do it on your phone? Hubby and I do an Excel spreadsheet every month. My kids do a budget too, but they use EVERYDOLLAR by Dave Ramsey. If you are doing a budget in your head, it doesn't count. It needs to be documented somewhere that you can see it.
Why do you need a budget you ask? Do you know where your money is going? Really, do you? Every dollar? Every penny? What could you do with all of that money that is slipping through your fingers. I know a lot of people don't like budgets. I get it. Who has time to do a budget when you have laundry to fold and dinner to cook, but can you afford to not do a budget? If you tell your money what to do and you actually follow through on your budget your finances will get better. You will feel like you got a raise. Isn't that worth 20 minutes of your time.
OK so lets talk about categories for this budget of yours? Everyone's is going to be different. No two people are exactly the same. So no two budgets will be the same. I will tell you how we do our budget, then you can add or drop categories that apply to you.
Groceries: We have to eat. This also includes, cleaning products, hygiene products and paper goods. Basically what comes from a grocery store.
Mortgagee or rent: We live in a house and have 13 years left on our mortgage
Haircuts: Yes we pay for haircuts
Vacation/Entertainment: We like to do stuff occasionally that costs money.
YD School: School costs for our youngest daughter include trips, SAT and AP tests, dances, occasional lunch, etc.
Sons College: This is the money we give him every month for gas, books, food, etc.
College Savings: This is were we put money to pay the actual school
Gifts: Birthdays, Christmas, Easter, Weddings, etc.
Blow Money: We have 2 of these. 1 for me and 1 for Hubby. It is not a lot but we do each get some money so we can do whatever we want no questions asked.
Savings: Whatever is left goes here since we do a zero based budget.
Now is when you have to do some work. Pull up/out you March bank statements, credit card bills and all of your receipts. Start writing everything down into the above categories. Every time you got coffee, every time you filled up your tank, every lip stick you bought, write it down. Go through everything. Now pull out a calculator and add it all up by category. Then add all of your categories together to get a total. This is how much you think you spent in March. Are you surprised on any categories? Did you know that you spent that much on your car? Are you shocked at the grocery budget?
Now take March's paystubs and add them up. Add in any side gigs or extra money that you have coming in. Is it the same as the total of all of your categories in your budget? Are you missing any money? Well that is probably what you spent in cash. Do you remember what you bought. Probably not.
If you want to make a budget, now is your chance. You can start today. By the end of the month you can see where all of your money went in April. You just have to start. Come on, give it a try. I promise, it doesn't hurt.
Pick your first category: Food. How much did you spend? Do you think that is about what you spend every month. More or less. Pick a number. Don't go to low or you are setting yourself up for failure. Now do the same thing for all of your categories. Go ahead I will wait while you do it....
Ok, now add it up. Good, you have a base plan. Now lets look at your income.
How much do you make? How much does your spouse make? What other sources of income do you get, child support, retirement accounts, eBay sales, SS? Write them all down and add them up. Does the two numbers match? Most likely no. Do you have extra money after your line items are done? Great. The rest of your money can go to debt or saving.
If your expenses add up to more than your income, you have to adjust your numbers. Say you are $200 short. Do you really need new clothes this month. Most people have plenty in their closest. So cut that out this month. What about you restaurant budget. Can you eat out less this month? Does you son need to buy lunch at school every day? How about twice a week? Go through every category that is flexible. Your mortgage doesn't change so don't touch that. You have to make all of the categories be equal or less then your income.
After you and your spouse have your budget done, you are ready for the month. Don't stress out if you go over the grocery budget by $20. Just take it from somewhere else in your budget and try again next month. It usually takes a few months to figure it out. Every month will be different based on what is going on in your life that month. Birthdays happen once a year so budget for those months. I don't know when your kids birthday is but you do, so budget more for gifts that month.
When you do a budget every month you will see where your money is going. You then can change what you are spending it on. You are the one telling your money what you want it to do. You will have more of your hard earned money because you made a budget. You are the one in charge, not your money.
April is financial literacy month so I thought we should talk about budgets. Do you have a budget? Do you make one every month? Do you write it in an old notebook? Do you do it in an Excel spreadsheet? Maybe you do it on your phone? Hubby and I do an Excel spreadsheet every month. My kids do a budget too, but they use EVERYDOLLAR by Dave Ramsey. If you are doing a budget in your head, it doesn't count. It needs to be documented somewhere that you can see it.
Why do you need a budget you ask? Do you know where your money is going? Really, do you? Every dollar? Every penny? What could you do with all of that money that is slipping through your fingers. I know a lot of people don't like budgets. I get it. Who has time to do a budget when you have laundry to fold and dinner to cook, but can you afford to not do a budget? If you tell your money what to do and you actually follow through on your budget your finances will get better. You will feel like you got a raise. Isn't that worth 20 minutes of your time.
OK so lets talk about categories for this budget of yours? Everyone's is going to be different. No two people are exactly the same. So no two budgets will be the same. I will tell you how we do our budget, then you can add or drop categories that apply to you.
Groceries: We have to eat. This also includes, cleaning products, hygiene products and paper goods. Basically what comes from a grocery store.
Mortgagee or rent: We live in a house and have 13 years left on our mortgage
Utilities: Water, electric, oil, cable, phones, Amazon Prime
Car: Gas, repairs, registration, Ezpass, inspections. We don't have a car payment but if you do, throw it here.
Insurance/Taxes: Car, health, life, disability, home
Giving/ Tithing: I believe in God. I give to my Church. I also believe in helping those less fortunate.
Home Improvement: Garden, tools, repairs, maintenance, upgrades
Medical: Doctors, dentists, hospitals, medication
Clothing: At some point we all buy clothes, new or used
Take out/Restaurants: We separate this from our groceries
Pets: We have a dog. She likes to eat. I also put her meds and vet bills here. Anything to pay for her goes here
Vacation/Entertainment: We like to do stuff occasionally that costs money.
YD School: School costs for our youngest daughter include trips, SAT and AP tests, dances, occasional lunch, etc.
Sons College: This is the money we give him every month for gas, books, food, etc.
College Savings: This is were we put money to pay the actual school
Gifts: Birthdays, Christmas, Easter, Weddings, etc.
Blow Money: We have 2 of these. 1 for me and 1 for Hubby. It is not a lot but we do each get some money so we can do whatever we want no questions asked.
Savings: Whatever is left goes here since we do a zero based budget.
Now is when you have to do some work. Pull up/out you March bank statements, credit card bills and all of your receipts. Start writing everything down into the above categories. Every time you got coffee, every time you filled up your tank, every lip stick you bought, write it down. Go through everything. Now pull out a calculator and add it all up by category. Then add all of your categories together to get a total. This is how much you think you spent in March. Are you surprised on any categories? Did you know that you spent that much on your car? Are you shocked at the grocery budget?
Now take March's paystubs and add them up. Add in any side gigs or extra money that you have coming in. Is it the same as the total of all of your categories in your budget? Are you missing any money? Well that is probably what you spent in cash. Do you remember what you bought. Probably not.
If you want to make a budget, now is your chance. You can start today. By the end of the month you can see where all of your money went in April. You just have to start. Come on, give it a try. I promise, it doesn't hurt.
Pick your first category: Food. How much did you spend? Do you think that is about what you spend every month. More or less. Pick a number. Don't go to low or you are setting yourself up for failure. Now do the same thing for all of your categories. Go ahead I will wait while you do it....
Ok, now add it up. Good, you have a base plan. Now lets look at your income.
How much do you make? How much does your spouse make? What other sources of income do you get, child support, retirement accounts, eBay sales, SS? Write them all down and add them up. Does the two numbers match? Most likely no. Do you have extra money after your line items are done? Great. The rest of your money can go to debt or saving.
If your expenses add up to more than your income, you have to adjust your numbers. Say you are $200 short. Do you really need new clothes this month. Most people have plenty in their closest. So cut that out this month. What about you restaurant budget. Can you eat out less this month? Does you son need to buy lunch at school every day? How about twice a week? Go through every category that is flexible. Your mortgage doesn't change so don't touch that. You have to make all of the categories be equal or less then your income.
After you and your spouse have your budget done, you are ready for the month. Don't stress out if you go over the grocery budget by $20. Just take it from somewhere else in your budget and try again next month. It usually takes a few months to figure it out. Every month will be different based on what is going on in your life that month. Birthdays happen once a year so budget for those months. I don't know when your kids birthday is but you do, so budget more for gifts that month.
When you do a budget every month you will see where your money is going. You then can change what you are spending it on. You are the one telling your money what you want it to do. You will have more of your hard earned money because you made a budget. You are the one in charge, not your money.
What an excellent post on budgeting. Very impressive indeed! Mimi ;)
ReplyDeleteI'm glad you have a category for discretionary spending on yourself and partner. It doesn't have to be much but it is important to have the freedom to save it for something special or to share a coffee with a friend. Life is a journey and a budget is important but it shouldn't be restrictive otherwise no-one will follow it. I notice you reference Dave Ramsey, he is a popular reference for US(?) bloggers but not well known in Australia. Cheers
ReplyDeleteWhen we started following Dave over 5 years ago I was very nervous about our budget. We had a lot of student loan debt taken out for our oldest daughter. While I was reading his book, it said to have some money to do whatever you wanted. My husband and I budgeted $20 each at that time. Most months we chose not to spend it, so it would roll over. Now that we are out of debt except for our mortgage, we do spend it. I went out to dinner earlier this month with some friends. I know the money is there for me to do what ever I want. Hubby has used his on lunch, car and bike stuff . It's his to do whatever he wants.
DeleteOur budget has given us so much freedom. When we go away, I know when can do fun things without worrying about it. We put it in the budget. The kids know how much they can spend on back to school clothes because it is in the budget. If I am tired or not feeling well, I know we can get takeout because it is in the budget. I have grown to love my budget. Never thought that would happen 5 years ago.
Hi and yes my husband and I do have a budget which we started doing in 2014 due to adverse occurrences in our lives. We can tell you where every cent went since then and run a zero budget as well which works well.
ReplyDeleteI can say that through having a budget we save far more than we did previously and are more conscious about the way we spend money too. As anything is spent I write it in my notebook and DH also puts it in his computer spreadsheet, a double check to make sure we are accurate. We save on average 48 - 61% of our dual after tax incomes whilst paying rent and saving a large deposit to have our home built.
We make a budget at the beginning of each year and follow that all year unless of course inflation is high and our cost of living rises beyond what our budget is set at and then we will adjust it accordingly.
Today we simply could not imagine not having a budget and for anyone who hasn't made a budget out yet there are so many benefits to doing so being the most important part is that you will definitely be better off if you stick to your budget and make a realistic one.
Sewingcreations15.
Great job. Working together with your spouse is so important. Our marriage has gotten so much stronger since we started doing a budget. We rarely fight about money any more.
DeleteHubby and I spend a few minutes every Saturday going over what we spent during the week and doing bills. Before the month is over we set up the next months budget. If something comes up that was unplanned for we talk about it and where to change our budget. In January we set our goals for the year. We have a plan in place and are working together with our family to get there.
It sounds like you and your husband are doing the same. I love hearing about how much you are able to save for your home. You are doing an amazing job. It will be so worth all of your hard work.
Thank you for your encouragement it is very much appreciated :).
DeleteSometimes it feels like it is a long road to save our deposit but we find we are also closer as a married couple since having a budget in place too.
You mention something very important there is that you and your husband counsel together on financial matters and update each other so you can make your budget work for the best of your family. We do the same and if we are not on track due to unexpected expenses we work together to find the best solution. So very important for both husband and wife to be on the same page financially and goals wise.
Sewingcreations15
We have tried me doing the bills, didn't work. Him doing the bills, also didn't work. For over the past 5 years WE have been doing the bills together and it works great. Only took us 19 years of marriage to figure it out. We didn't know what the other one was doing when only one of us was doing it. Now we both are aware of 100% of our finances. It really has helped our marriage and budget to do it together.
Delete