Monthly Budgeting

Budgeting is the suck. I know.

This post is not glamorous, but I think it might help some of the folks that read my blog.

Seth and I are tight on funds right now….well, okay. We've always been tight on funds. We might always be tight on funds, I don't know. In the meantime, though, I've fine-tuned a budgeting process that I think would probably work really well for a lot of young families, and I wanted to share it in case those of you that read my blog are attempting to work out your budgeting.

First, start using Google Calendar and Google Sheets. Google Docs and Google Sheets works very similarly to Microsoft Excel, except it's a dumbed-down version and can be accessed from anywhere (even via mobile, which is awesome for when you're on-the-go and need to access it). Sync whatever email you are using to access your Google Calendar to your phone. Set an alert on your Google Calendar for every Friday evening to do your budgeting for that week. (It is actually easier if you do it daily, but ain't nobody got time fo' dat.)

Second, start a spreadsheet in Google Sheets, and call it Monthly Budgeting 2015. Label the tabs along the bottom of the notebook by month (so, since this year is almost over, "November" and "December").  Go into the November spreadsheet, and in bold, type "Income". Beneath that, start calculating and adding the following figures:
Total monthly income, yourself
Total monthly income, spouse/anyone else that contributes to household expenses
Total income (add the two figures above)

Tab down a couple of lines, and in bold, type "Expenses". Beneath that, create a column of categories where each of your expenses might fall. Mine looks like this:
Rent
Utilities
Internet
Loans
Cell phone
Gasoline
Groceries
Savings
Next month's rent (I'll explain this shortly)
Health/beauty
Allowances (I'll explain this shortly)
Cushion/gifts
Bridge (I'll explain this shortly)
Total Expenses

In the column next to each category, put in a budget for that category. To do this, I went back through the previous three months when I created my first budget, and decided what was the max or average for each category that we typically spent, and used that figure. You can do it however you want, depending on how strict you want your budget to be.

To create a "total expenses" cell that changes if you need to add or delete rows, click on the cell where you'd like the figure to be. Type in "=SUM( )" and between the parentheses, highlight all the cells where there are expense figures. It will total all of the cells in that range for you, and will keep them totaled if you change/add/delete any cells. SUPER helpful. I do the same thing for the "total income" cell.

Let me explain a couple of the figures:

Next month's rent: I carve out a space in my budget for the following month's rent because I make additional deposits into our savings and onto our student loans at the end of every month. The basic goal is to deposit as much as I can (nearly drain our checking account) around the 27th of each month and put as much as I can in those two places. If I don't carve out space for the next month's rent (which typically comes out of our account on the first), I might accidentally drain that money out of the account too and we would overdraw when rent came out….and that would be bad news bears.

Allowances: Decide with your spouse what is a fair amount for each of you to spend on personal luxuries every month. This is 100% personal preference and dependent on the relationship of the couple. For Seth and I, we choose to put all our month in our accounts, and we are treated equally when it comes to allowances, regardless of how much each of us makes. Some couples will do percentages, some will take 100% and give allowances to the other spouse - I'm not here to judge your process, just to give you an idea of what works for us.

Bridge: At the end of the month, when I go to dump as much as I can into our savings accounts or onto our student loans, I take a look at our calendar and see when our next paycheck is coming in (either from Seth or I). I calculate how much we will need to last us until that paycheck comes through (based on whether we have cell phone payments, student loan auto-withdraws, etc. coming out in the meantime) and I leave that amount in the account as well. This creates a "bridge" for us so we don't overdraw between the end of the month and the deposit of our next paycheck.

Make sure that your expenses are less than your income. If your expenses are more than your income, then you know you have to find somewhere to cut back - or, start bringing in more income.

Third, at the end of each week, go through your online banking and enter in totals for each category. For example, if you have three charges from Shell, Exxon and BP, then add those figures and put that amount in the "gasoline" column. If you have two charges from Kroger and Marsh, add those figures and put that amount in the "groceries" column. You'll see when you're getting close to the amount you budgeted for the month, and you'll either want to scale back in that category or make room in another to allocate some of those funds.

This all sounds super-complicated, but once you set up your first month's spreadsheet and get on a roll, it's actually pretty simple. You can copy/paste that spreadsheet into the following months'  spreadsheets, and it makes the process pretty smooth - you never have to do this whole process over again.

1 comments:

  1. I'm so bad with my money , I need to be more organized like you :)

    ReplyDelete

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