Talk to me about creating a budget!

[worm761]

I am trying to pay off some bills and get some extra money in the bank. I have never actually made a budget but having just recently gotten married, I think that DH and I really should learn to live with a budget. So, give me your best advice! And yes, I am currently reading YNAB's free ebook so I am at least on a path. What do you put in your budget? What should I? I will most likely try to create something in an Excel sheet on the computer so looking for any advice! Thank you so much!

 

[Woth2982]

Hi! I am a cost accountant so I do this not only in life but for my job! I love spreadsheets and use them frequently. Things i put in my budget, $50 a week for food (it is only me and I don't usually even use all that), $80 a week for gas (I DO use all this), $100 per pay check directly into my savings account (if I never see it, it doesn't exist), $100 a month for cable/phone/internet, $50 a month for electric (often lower), then I take out what I owe for my mortgage/taxes/condo fees etc. I think starting on a budget, and building a savings account before you have kids is very important. If you keep the savings money out of your take home pay, you won't really miss it every month. So many people I know have no savings, and as a paranoid person I always plan for the worst. I do each year on a separate tab on my spread sheet so I can see what my month to month spending is, and where the increases are. I also put all my personal expenditures on the spread sheet (like how much I spent going out to eat, what the new sweater I bought was, etc), this helps me "trim the fat" from my budget aka what can I cut out to save a few dollars the next month. Good luck working on your budget!

 

[Mickey1Fan]

I like and use Gail Vaz-Oxlade's Interactive Budget Worksheet. I renamed some of the categories but she covers pretty much everything. There is good advice on her site as well.

http://www.gailvazoxlade.com/resources.html

In my daily agenda I write down everything I spend so I know where every penny goes.

 

[mrodgers]

My Excel budget sheet is quite large. I don't budget monthly like most people. I budget every week as my wife and I get paid on opposite weeks. I have 3 columns, Allotment, Budget, and Balance. For each week, I have marked in the budget column, the cell is colored yellow for the week it is due. When I pay it, I mark the cell green. For each week, I have an expected pay amount written in and the amounts are then split up in the allotment column depending on what needs paid that week. The balance column calculates from the previous week balance plus the allotment column minus the budget column.

The weekly columns are stretched out for the entire year. I can just copy the Excel tab for this year and change the date of the first column to the first pay of the year for next year and everything pretty much follows the correct dates for due dates with just a few here and there needing to be changed for bills that might have been due on payday that are now due the day before payday.

My biggest problem prior to budgeting was having extra money one pay and spending that extra, then bills taking up most of the next many pays to where 3 or 4 pays later, I had bills due that the paycheck that week wasn't enough. I started budgeting with the weekly format so that I can easily see those spots where the house payment will be due the same time other bills would be due, so I can mark previous weeks to cover those bills. There are several spots where I have money allotted to pay a monthly bill prior to even the previous month's bill being due.

Categories are laid out for each bill. I have 3 sections. First section comes from the local bank to where I live and has gas, groceries, dining, and an allowance for each of us and the kids. Second section comes from our Credit Union account which isn't local and has a list of all monthly bills. Third category holds all bills that are not monthly such as car insurance and heating oil and any non-recurring bills such as medical, car expenses, house expenses, vacation, clothing, and Christmas. For these I have a minimum amount marked with the category, for example, I spend about $1200/year on heating oil, thus my minimum is $1200 and I keep it at this balance. When I pay for heating oil, I add back to the balance the next paychecks until it is back up to the $1200 balance. This third section, since the categories do not come on a monthly basis, is held in the savings account which is tied to the checking account at my Credit Union.

It is quite an elaborate spreadsheet with automatic calculations, conditional formatting, and color codes.

 

[Fjobe]

I have a system similar to the above poster except my budget is monthly. I have an excel spreadsheet with a monthly budget template that includes all regular monthly expenses. I also have a few blank rows for extra expenses. I have 4 columns: My paycheck, DH's 1st Paycheck, DH's 2nd paycheck, and Reimbursements. This way I know which expense is coming out of what income for the month. I have 2 set monthly reimbursements which is why I have that category. When I have submitted payment, I change it to red, and when the payment clears the bank I "x" it out.

We also have a list of priorities, so if we get extra money we know where we are going to put that money. When the top item is saved for/paid off, the next item moves to priority.

Categories on my budget are: house, internet, gas, water & sewer, insurance, electric, phone, satellite, gas, groceries, household items, spending money, daycare, and priority.

I check my budget with my online bank account daily.

 

[Bete]

to save. A budget to me keeps you on track hopefully, but it doesn't necessarily get you to save. Never justify an extra expense, not in the budget. Learn to get along with the basics, not the extras.

The secret to saving is living below your means. Also, it helps if you can get to a bare bones mentality. You need to change your way of a life to a degree. You need to ask hard questions of yourself. This can be more difficult if you both are not are not striving to the same end. If one makes all the sacrifices, this can be a sore spot in the marriage. Take baby steps towards saving; so, the crunch doesn't feel as bad. Do it step by step, not all at once necessarily.

Just to begin, if you are living in an apartment can you get a cheaper apartment (when your lease is up) even if it means less perks or a smaller place or cheaper neighborhood? Can you find a cheaper place where one of you can walk to work? Can you then get by with one car? Stay away from buying a car; keep your old car in good shape by doing regular maintenance. Get all your errands done at the same time to avoid extra car trips which means more gasoline and wear and tear on your car. Learn to conserve. For example, read together in the same room; one room with lights is better than two. I've gone as far as getting light bulbs with less wattage. If you are using the kitchen to prepare a meal, then stay together in the kitchen even if the other is relaxing. If you are paying for your own hot water (like in your gas bill) learn to take a quicker shower and avoid baths. Learn to eat out less or at least go to cheaper places. Learn to be romantic without spending money for it. For example, give each other a massage. Learn to enjoy the free places for fun like a state park, beach, ride bikes, take walks, and so forth. Take turns with your friends and relatives and have nights in at each place playing games for enjoyment. You can do this with just the two of you, too. Change your phone plan to something cheaper. Learn to get by on less minutes. Make your own meals and coffee. Learn to eat and drink generic products. For me some store brands I like better. Try to buy everything on sale or with a coupon; the best is buying clearance even if it means you don't get the newest model. Get reward cards for your purchases. Don't buy new clothes just to have the newest trend in fashion. If you really want to be frugal learn to shop Goodwill, thrift stores, flea markets, and garage sales.

We want to entitle ourselves and that leads to bigger spending. If you can't enjoy spending less (knowing that you are saving) then consider a part time job. This will give you extra money and you will be too tired to spend out of your budget. There's an old saying, that two can live as one; live by the saying.

 

[Happyjen27]

Step 1: Don't be intimidated by very detailed budgets.

Most of us budgeters took years to develop our systems, but mine started with a spiral bound notebook.

Step 2: Add up your bills: rent/mortgage, utilities, cell phones, gas, insurance, car payments, any loans you might have.

Step 3: Add up some spending goals for the flexibles: food, restaurants, clothes. (yes, you need food, but the amount you spend can be flexible within a certain reasonable range).

Step 4: Track what else you're spending. It's hard on a weekly or monthly basis to determine certain costs, like Dr. visits, prescriptions, gifts, etc. So, it might take a while to build up some data on those to determine how much of your paychecks should be devoted to such things.

Step 5: Start planning ahead. This is the advantage of budgetting versus winging it. In February, we know Christmas is coming. Budgeters can prepare by setting aside 20 bucks a week in an account to use to buy Christmas gifts. People who wing it may overspend and then spend months paying it off.

You can start as small or as big as you want. Use the tools like Gail Vaz-Oxlade's or Suze Orman's to guide you and help you consider things you may not think of ahead of time.

Budgets aren't always about scrimping and saving. They don't have to be about limits, but rather plans to live the good life and where to put your abundance so you don't waste it all away on something that later you will consider frivolous.

 

[elcodfish]

My suggestion? Go to google drive, and make a spreadsheet. Make columns with things like:
groceries
rent
gas
utilities
eating out
entertainment

and for the next month or 2, just start writing down EVERYTHING you spend, even .75 from the snack machine at work, and see where your money goes and from there decide how you want to spend/save your income. It can help you see exactly where you are overspending and make you more aware of what you are spending.

 

[Tinetine]

What really helps me maintain my budget goals is to look at my expenses and consider them yearly instead of weekly. For example, if we get take out, or eat out twice a week, that's about 40$ each time (family of 4). Weekly, it's not so bad. But do I really want to spend 4160$ a year on take out ? That's a disney trip ! So we cut restaurants out of our budget, we only allow 10 to 20$ for a meal after the grocery shopping is done.
Something else that helped me is to set yearly goals. This year, I want to have 5k set aside for emergencies, I need 3k more for our next trip, so that's 150$ each week that goes into savings. It helps to save for something, otherwise you may feel you are depriving yourself for nothing.Track your savings, and be proud of every dollar saved !

 

[threeboysmom]

I am all for budgeting (and sticking to it!) and have a fairly elaborate spreadsheet that I created in Excel (which I love since it does all the calculations for me). I don't mind sharing it with you to give you an idea, but you really need to find something that works for YOU.

Figure out what your monthly income is (or weekly if you prefer to plan that way). That gives you the starting point for your budget. You cannot go over that amount!

I then listed all my set bills that don't change month to month (ie., mortgage, insurance, etc.)

I then listed variables that can change monthly, but I had a general idea of what I spent (ie electricity, gas, food, etc.)

Don't forget to budget for miscellanous expenses!

AND DON'T FORGET TO PUT SAVINGS AS A "SET BILL" EACH MONTH. You can have the greatest of budget plans, but if you don't treat savings like a bill, it WON'T HAPPEN!

See how close your expenses/bills are to your income. Do some scaling back or fudging around with numbers until they are pretty much equal.

A budget is a work in process. I have to fine tune mine every few months. If gas prices rise significantly, I need to adjust my monthly gas figure and take it off somewhere else (such as food or miscellaneous).

I keep all my receipts and every few days, I enter them into Excel under the appropriate category - gas, food, and miscellaneous. Excel keeps a running total for me so I can see at a glance how close I'm getting to the monthly figure and whether I need to seriously scale back to avoid going over budget.

Hope this helps!

 

[kt_mom]

I also have created my own spreadsheets in Excel. ( I love Excel!)

I have different tabs for different things. My main tab is my budget tab and its in section by month. In each month I have a section on the right for our 15th paychecks and a section on the left for our 30th paychecks. In the middle is DH commision and bonus columns. Then I list all our bills under whichever side they are paid from. There are spaces left extra things that may come up or special events I know of ahead of time. Then at the bottom of each row it calculates what we have left after the bills are paid.

I usually have my months done about a year out with estimates for commision and bonuses. I pay all bills out of our salaries and the commision and bonuses go towards paying extra debts (almost done!!) and saving for vacation or extras and then money into savings. The regular monthly payment on credit cards is included under our salaries.


Then my next tab is our checking balance and I update and balance that every day. I set up all my bill pays a few days before pay day so they are already on there. I highlight them green and when they clear they become yellow. Any charges on our debit cards are blue and then yellow when they clear.

Then I have a bills tab where I have what's left of our revolving debts listed with estimated payments and when I hope to have them paid off.

Right now I have added a Christmas tab where I am listing purchases and plan to purchase gifts and costs so I can track what I've spent and what I have yet to spend.

I love doing it in Excel because it allows me to make changes as I go if I need to or if I find a better way.

 

[AmericangirlinFrance]

We have (well, my husband set it up) an Excel spreadsheet budget. I am not very good at Excel so if it was just me, I'd do something simpler, but this works for both of us.

We have had this system set up for a while so we've had some time to build into it. First, we track ALL our spending, even little things. This may not work for everyone but we find it helpful. It's not a huge deal - just collect your receipts. We just stick our receipts by the computer every day and enter them in once or twice a week. We divide our spending into categories - food, entertainment (includes eating out), gas, insurance, mortgage, electric, student loan payments, medical expenses, household supplies, etc. We have a lot of categories. You can adjust this however it works for you.

We have been tracking expenses long enough to know roughly how much we spend per month in each category, so we have that as a set "amount" for the month. Say, $300 for food. We track our spending all month, so at any set point, we can see how much we have left in our budgeted allotment. This helps us plan our spending.

We also set aside a certain amount in each paycheck for recurring yearly, biyearly, or unexpected expenses - such as professional memberships, car insurance (if you don't pay monthly), medical expenses, Christmas fund, car tags renewal, AAA renewal, car maintenance, etc. I can't tell you what a huge relief it is to know that when the time comes to pay those larger, infrequent expenses, we have set aside a little bit each month, so it's never a strain on our finances to pay those things.

Of course, you have to fit all these categories into your income. If you don't have enough money for all the different pots, you have to cut something back. We have cut WAY back on our food and eating out expenses by couponing, shopping sales, eating at home, and taking lunch to work, for example.

This way of budgeting really takes the stress out of it for us. We know exactly how much money we have for each category in the month. For example, my husband likes to golf on occasion, which can be kind of expensive. Well, that comes out of the "entertainment" budget for the month. If the money is there, he goes golfing. If it's not, he doesn't. We're never in a situation of "better not do that because we have to pay the electric bill." We know how our money is distributed. We don't have to worry about not being able to pay a credit card bill, for example, because the money has already been set aside from our paychecks.

Hope that makes sense! Our budget is pretty detail-intensive (and difficult to set up), but I find that it really makes our lives easier and less stressful. We never fight about money because we know exactly where our money is going and how much we have in each category.

 

[RitaE]

I'm actually a huge fan of the YNAB software. I think there is a bit of a learning curve on getting everything set-up and learning to use it, but I would encourage you to keep with it for at least the full trial period to see how it helps.

We only keep our checking and credit card accounts "On Budget." It took us about 6 months to build up the buffer they talk about in the eBook and now we budget the current month based on the last month's income

My budgets in YNAB kind of go like this to give you an idea. Your categories will become much more obvious to you as you use the software over a period of time. The trick is, every $ you bring in gets assigned somewhere, even if it is just to your buffer account. Then if you overspend somewhere (and you will because everybody does) you have to decide which budget category gets decreased to accommodate, or will you "steal" from savings. It forces you to make a conscious decision.

Monthly Expenses
Mort
Elec.
Gas
Etc

Spending
Groceries
Restaurant
Home Maint
Clothing
Auto Fuel
Buffer
etc

Transfers Out to Savings (I do all these off budget, some people keep them on budget in YNAB)
Car Replacement
Emergency
Vacation
etc

Some accounts I allow the balance to roll over to next months if we don't spend all our budget. For instance clothing. If I don't spend $100 on clothing this month, the excess rolls into next months budget and we have extra to spend then. Other things I zero out at the end of the month and put into our "buffer" category to be reallocated in the future as we need it.

I'm kind of a number nerd so I love the YNAB software. Other people just don't like it and they often just don't like the complication of having to learn how to use it.

 

[raftislander]

I'm actually a huge fan of the YNAB software.

I'm kind of a number nerd so I love the YNAB software. Other people just don't like it and they often just don't like the complication of having to learn how to use it.

I am also a huge fan of the YNAB system- I am not a number nerd but have found the system fairly easy to learn and there is a great deal of free user support and training. So if you haven't started the free trial yet- check it out. I think that what I like so much about the YNAB system it is focuses you to think about what your money needs to do today and tomorrow rather than just tracking how you spent your money yesterday. You stop focusing on your checking account balance and start focusing on your budget allotments and whether you have any money in the budget to spend in a particular category. Like a pp does - this system encourages you to save a small chunk each paycheck for a yearly bill or expense so that the money has already been saved by the time the bill arrives. Because you save a small chunk each paycheck to go to future bill your checking balance begins to grow. You also start building a buffer and an emergency funds so that nasty surprises- and these will happen- just dont have the same impact. The system expects that it will take a while for you to figure out your budget and it is easy to make adjustments-but you are always working with money you currently have.