Budgeting that Works for Us

I mentioned about a month ago a little about how we run our family budget. Several of you said you’d be interested in hearing more and so I put together this little post. Today I am sharing things that have worked for us over the years. Perhaps they will be helpful to you.

We treat all the dollars that come into our house like employees with a job to do. We expect them to do the work assigned to them. Here’s in simple terms how we do it

• Put all of the income at the top of the page.
  • I have always used an excel spreadsheet. But you can use a notepad and a pen. Whatever works for you.
  • In our house we combine our money. I know a lot of couples keep separate accounts. You have reasons for whatever choice you make and that is up to you. We made the decision from day one to have three main accounts – one is a joint account for joint expenses, one is for his spending money, one is for my spending money. We each get an agreed to amount in our individual spending accounts and it is what some people would call our fun money.
• Be realistic as you plan expenses
  • Where I think most people fail in putting together a budget is a lack of reality. If you want to get your nails done, you need to put that into your budget. If you are going to buy Starbucks every day, you need to plan that into your budget. You do yourself no favors pretending you are going to save $300 from each check, if every week you are pulling money out of the “savings” to eat out, or get a massage, or whatever it is you already know you are going to do.
• Assign each dollar to their job
  • I know it is tempting to leave a flex and not plan every single dollar…..you know, just in case. Well you can just about count on you wasting that flex every paycheck. Go ahead and plan every single dollar. Go ahead and give every dollar a job. Then you will be more successful when the car maintenance dollars try to sneak over and become new purse dollars. No, no car maintenance dollars – you get right back over there and do your job
• Set up safeguards
  • We are all human and it can sometimes be a challenge to do what we know we are suppose to do. This becomes painfully evident to me every day when I say I am not going to eat a cookie after breakfast. So recognize the things that pull you off track and then safeguard yourself against them. Every week when the paycheck hits the account I move the dollars to where they are supposed to be. Our bank allows us to have as many accounts as we want and to name them whatever we want. So I have several – Insurance, Tuition, Vacation, Christmas, Charity, etc. This way there is never a temptation to swipe a debit card or buy something out of plan……because I don’t keep tempting money hanging around. In other words, I send every dollar to their assignment immediately.
• Execute
  • Once you have a plan – go do it. Allow your self some adjustments. Once you walk through your budget one month, you may discover things you want to change, adjustments you need to make. That is not only okay, it should be expected. You are not going to get it perfect the first time out. This is why I use an excel spreadsheet. It helps me see how much in a month or a year I am spending on a particular category. It will help you decide how important that category is to you and if you want to dedicate the dollars you are currently spending on it.

Now here’s a rough sample

Philosophy behind the budget

• We pay tithes first – non-negotiable
• If we want to take a big vacation or buy a big ticket item, we price it out and then save up for it.
• Anything that needs to be paid once a semester (tuition) or once a year (insurance) we plan in our budget to have it saved by the due date so we can pay cash
• We carry zero debt (what about the house you may ask…..well I will tell you about how we work that on Wednesday)

Also on Wednesday, I will share some good books and other resources that may be helpful to you.

I am not an expert, but always happy to share things that work for us. Let me know if you have any questions.