Who is ready to get their money organized? I know it may not seem like the most fun topic, but it is something we all have to deal with and is necessary to keep our family and our home running. I can personally tell you that having a budget frees up space in your mind, it answers a lot of questions about what to do for you, helps sets limits as well as helps you get where you want to go.
I have to tell you that I used to hate budgets and think they were really dumb. Really dumb. I never quite understood how a budget could help and I didn’t think they applied to me. I also had debt. Lots of debt. Hmmm…wonder if there was a connection there? Then my husband and I bought our first house together and I closed my speech-language pathology practice and got pregnant. We totally needed a budget so we could pay the bills and I wanted to stay home with our baby, so we desperately needed a budget to go from 2 incomes to one income with a baby and a brand new house. Once we figured out how to budget, we have never turned back. I’m going to show you what works for us.
This is part of my weekly real organized series where I am sharing one small(ish) project each week to help us get our home and our family a bit more organized. The goal of this series is for us to be able to organize some of those things that we as moms have to deal with on a weekly or daily basis. By organizing those things we can free up time in our week as well as space in our homes and minds. All of these things free us up to pursue spending more time with our family as well as find some time and space to do something we love and find fulfilling as well.
I know I shared with you in another recent post that my husband and I currently do have some debt. I know that I’m sharing budgeting today and I don’t think having debt is a good idea in the long run. I also know that there are times in life that sometimes you have to do what you have to do. When my husband was unemployed for 9 months and then got a job with a 20k a year pay cut, that proved to be one of those times for us. The thing that I do know is that budgeting really helped us, even then. I know we would have more debt than we do if we didn’t have a budget and understand how to make a budget work. All that off my chest and feeling honest with you, let’s talk about how to create a budget and then I’m going to show you how we keep track of our budget with an app.
I have some budget planning worksheets for you at the bottom of this post. For me, the hardest thing about creating a budget was figuring out what amount to budget and what categories we needed. I’m hoping that my worksheets can take that element out of your planning your budget.
The planning worksheet I have for you has a great start of categories. If you don’t currently have a budget, start by printing this planning worksheet out. Once you have that, you are going to need to track what you spend for a few months. I would recommend at least 2, but if you are patient, 3 months may be even better. I’m rarely patient, so I probably only did 1 month…not the best plan, but it has worked in the long run. The planning worksheet has columns for you to give a plan as to what you think you will spend in that category for the month. Then at the end of the month, you can fill in how much you actually spent and subtract the difference. That number will go in the actual column.
When you have done this for 2-3 months, you will get an idea of what you are spending where. It can be eye opening. There may be some habits and things you are spending money on that you don’t realize how much they add up to in a month. $5 for a sandwich on a work day doesn’t sound too bad, but if you do that every work day for the whole month it is $100.
So how exactly can you keep track of everything you spend to know what the totals are at the end of the month? You can go old school and track them on paper or an Excel spreadsheet. Your bank may offer a statement that you can figure things out from. I bank with USAA and I can go in and add a category to each transaction. If I wanted to use that for my budget, I could see the totals at the end of the month.
Instead, I LOVE the app Goodbudget. There is a free version that comes with 10 monthly envelopes and 10 yearly envelopes. You can also pay for the upgraded plan which offers unlimited envelopes. With Goodbudget, you can keep track of every penny you spend. It is envelope budgeting, if you have heard of that, but in a modern form.
If you choose to use Goodbudget or another budgeting app, what you can do is enter your spending right at the register or with your receipt just after you spend money. For example, if I go to Target and spend $20 on groceries, I can immediately enter that $20 and put it in the Grocery (or food for us) envelope. It will automatically sync, so if my husband is thinking of picking me up a bottle of wine to go with dinner (a girl can dream), he can look at the app and see how much money we have in the food category and know if we have the money for him to get that bottle of wine.
In terms of figuring out how much you are spending, you can use the reports feature to look at one category and quickly see how much you spent for the month. Put that amount on your planning worksheet and subtract it from your plan to see how you did. Adjust your budget accordingly for the next month you are tracking your spending.
Once you have had a chance to see where you are spending your money, it is time to figure out if that works for you. Do you have financial goals? Are you trying to pay off a loan early or pay off debt or save for retirement? Are those things being taking care of in how you are currently spending your money? You will have to figure out what is most important to you. I’m not going to try to tell you that. I know for me, I feel best when we have savings and a cushion as well as when we are contributing to our retirement fund. It has slowed down our repayment of our debt a little bit, but I’m OK with that because if my husband loses his job again, I know we have a cushion. You have to decide what you feel is best for you and your family.
Next, you need to make the numbers work. Sometimes that is the sucky part. That Starbucks habit may have to get cut in half. You may need to pack a lunch for work and have the kids take a lunch to school. If any of those are the case, the organized meal planning and organized grocery shopping posts may be helpful to you.
The second worksheet is the place to put your finalized budget. Then you can add these amounts to your app so you can easily keep up and stay on track. I love that when I’m wandering through Target and I see something I really want for the house or whatever, I can easily pull up my Goodbudget app and see if I have the money or if I need to wait. It usually also makes me think about if I was saving that money up for something else and takes some of that impulse buying out of the picture. Good thing for me!
When you have your budget figured out, the app has a bar at the top of each category that is either green (showing you have money and are on track) or red (if you are negative in that category). It moves based on the day of the month and when you will next fill your envelopes. That movement is to show you if you are spending too fast for that budget period or on track, which is particularly helpful with categories like food where you may need to buy food each week but the envelope won’t be re-filled for 2+ weeks.
The Goodbudget app also offers those annual envelopes I mentioned. They are perfect for keeping track of those yearly expenses and saving up for them all throughout the year. For example, I have a SiriusXM account. I know that fee is going to come up once a year and I can have an envelope to save up for that so it doesn’t sneak up on me when it is due. We also use these envelopes to save up for birthdays and Christmas all year long. We save a set amount from every paycheck for those two things. No need to wonder how to pay for Christmas or birthday presents because we have saved all year. It also means no debt for those things as well. Perfect!
The last thing is that about once a year you will want to re-evaluate your budget. You may need to make some changes because you see certain categories always have extra while others are always negative. Maybe you got a raise, take that into account. It is just a good idea to give your budget a once-over at least once a year. It isn’t something that you just set and forget forever.
Budgeting is actually pretty simple when you get used to it. I used to think it was this ball and chain to have a budget, but having had a budget for 15 years now, I doubt I will ever live without one again. In my opinion, it frees me up to not worry about bills and money. It gives me limits, which is a good thing. It helps me plan ahead and stay organized so that I don’t have things sneak up on me. It has helped us build a cushion of savings, which bring peace to me. I could go on about the benefits, so if you don’t currently have a budget, I would recommend you start one no matter that size of income you have. That was my excuse when we started our budget…we didn’t have enough money to make a budget(we even had a financial planner tell us that). I would say that if you are struggling financially, you need a budget even more…even if it is a little depressing. I know. I’ve been there. I also know that during that time of our life, we had no debt and some saving and our budget was the reason we had those things. It certainly can’t hurt for you to give it a try. I promise it won’t bite. 😉
For those of you who are budgeting pros, what tips do you have to add to what I’ve shared? Leave a comment below. I’d love to learn more.
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