In my opinion, the reason most people have problems with money is that no one spent the time to help them understand what it means to budget. Most people think it is just something to do to save money or pay off debt. Budgeting will help you do these things but it is also a way to not have to worry about money. If you use a budget, you know exactly how much money is available for impromptu gifts, trips, meals, etc.
Justin and I have been budgeting together since we were dating. We currently have separate bank accounts and we use mine as a Zero Out Account. We’ve budgeted all of my income towards the majority of our bills and for a little bit of “fun money”. Mostly to us “fun money” is for eating out so that neither of us has to cook but sometimes it’s for a surprise weekend trip or some item one of us has been eyeing for a while.
Every week, sometimes even multiple times a week, I sit down and I write out how much money is in my account, what bills are due before my next check and see what money is left. A lot of times this leads to me going ahead and projecting what my next check will be and then subtracting all the bills that are due before the I get paid again and seeing what is left over and then going through the cycle again until I tire of it. I absolutely love to see where my money is going and what money I have available to spend on “fun” items.
Here is an example of how my weekly budget review goes. This is not my actual pay or actual bills. This is purely an example using made up amounts to show how I do our budget.
Income (Bi-weekly): $1,000
Internet: (80)
Car Payment #1: (500)
Cell Phone Bill: (160)
Gas: (40)
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Fun Money $220
Once I do this, I know that we have $220 that we can just blow on whatever it is we choose. This could be setting part of that aside in savings and spending the rest, or just spending some of that and letting the rest rollover into my next pay period or we could spend it all.
The best part of budgeting like this is, it goes a little at a time so that you’re not overwhelmed by the month by a whole. I know that all my bills are covered for each pay period and exactly what I have available to spend however my husband and I decide. There is no more second guessing or hoping that we got everything covered and didn’t spend too much on nonessentials.
There are several apps out that are available to help you budget. In the past, I’ve used Mint: Personal Finance & Money and Smart Dollar. Smart Dollar is one that you have to pay for. It is a part of the Dave Ramsey Smart Dollar program, which a great tool to help you determine what steps to take to get out of debt and build wealth. Mint is a free app and it lets you set a budget for several different categories and you manually input what you spend or you can link your bank accounts so the data automatically gets loaded into the system. You can also make an excel spreadsheet and input your income and all your bills and create formulas to calculate everything for you.
As of right now, my favorite way to manage our budget is to use old-fashioned pen and paper. I like to sit down and write it all out and see by my own calculations, what money is for bills and what is available for us to spend on whatever we wish. Try out a few different ways and see what works for you. I found that I did not pay enough attention to the apps or update them as frequently as I should, so handwriting my budget each week seems to be the best option for me.
Knowing where your money goes gives you a great sense of accomplishment, or at least it does me. I hope you’ve enjoyed reading this and that it helps you with your work on your financial situation. Be sure to check back for more posts soon!
