Well, HOWDY! Have you missed me?
I have certainly been enjoying my Summer Sabbatical as I'm calling it...but I had to take a break from my break to bring you this LIFE CHANGING tip.
I explained in THIS POST that we prefer to spend our money on credit cards because of the security, digital tracking, and perks. Everyone is different, that's just what works for us.
When using credit cards you have to exercise a LOT of self-control.
Weird, right? P.S...We like to use THIS SITE to help us find the right credit card for us.
With my old budgeting system I simply kept a running total throughout the entire month.
I would spend up my budget 1/2 way through the month and be out of luck.
I have since adapted my system and it's better than ever. It has - quite literally - saved our financial lives! See how I do it in this video:
Click below to watch the video on Youtube, or click HERE to watch it online.
(Be sure to watch the video first or the following will make absolutely no sense!)
Let's break it down now!...
Simple way to budget and track your spending
1. Decide what your budget should be. Click HERE for grocery budget parameters. Click HERE for a full tutorial on how I save 1/2 on my groceries every month without clipping a single coupon.
Grocery budget includes:
Anything you could find at a neighborhood grocery store.
We're not talking a super Walmart grocery store, here. We're talking a neighborhood Walmart, Smiths, Safeway-type store. They don't have power drills and sheets for your bed, but they have most of the basic items you might need to buy on a day to day basis. Ex:
Food, shampoo, dog food, lotion, baby wipes/diapers, shaving cream, ziplock baggies, basic kitchen utensils & baking items, cleaning supplies, milk, basic cold remedy medicine, etc.
"Other" budget includes:
Money set aside for normal, regular, non-grocery expenses.
These are "want to have" items most of the time, and not "need to have" items. This does NOT include any form of bill or utility expense, see the next category for that.
Home decor needs, clothing, hair cuts, babysitting money, piano lessons, getting the car cleaned, school pictures, lunch with the girls, pedicure, shoe repair, gifts for birthdays/showers, etc.
Where do bills and gas go? In our house, that comes from our family budget.
Family budget includes:
Expected, set monthly expenses involving the family, house, and travel, as well as unexpected expenses involving the family.
These are the "need to have" expenses that keeps the family running, and is NOT food-related.
Utilities (gas, electric, cable, internet), medical expenses (co-pays, medical bills, insurance), car expenses (gas, repairs, new tires, registering the car, oil changes), home costs (mortgage payment, homeowners insurance, home repairs, new water heater, new furniture, TV, or other large household expenses, etc.), family entertainment (travel, trips, date night), etc.
See below (the bank accounts section) for how we separate all these budgets out.
How do you find out how much should be in you "other" budget each month?
- Pull out your detailed statements from the last 3 months that show every dime you've spent (spread sheet, credit card statement, or whatever you use to track your spending).
- Decide what will be covered in YOUR "other" budget.
- Total up how much you spent on "other" in the first month, then second, then third.
- Average them out (add the sum of the 3 months then divide by 3).
- There's your STARTING point....
- ...now...cut it in half :) If half seems to harsh, cut it down and start there. Make it hurt a little, it's almost guaranteed you are spending more than you should because, well, that's human nature!
Once you decide what your budget it, here's what your envelope will look like (be sure to put the month and year at the top of the envelope - not pictured here).
Here it is broken down:
2. The point is that you stay WITHIN your weekly budget. However, life happens. So IF you happen to go over, remember...NO BORROWING BELOW THE LINE! You can only borrow side-to-side.
3. The last point is to help you stay BELOW budget and get out of the habit of spending every dime of it. If it's the end of the week and you have money left in your budget don't say,
"sweet! $17? Let's go out to dinner!"
Oh, no, no my friends.
Rather, take the $17 and put it in your SLUSH FUND.
Slush fund: Separate savings account that is used strictly for fun money. The spending of the fun money should be decided in advance. See lots more info on this account in THIS POST.
Ex: saving up for vacation...a new trampoline...down payment on a new car, etc. Anything that you would LIKE to have, that you don't NEED to have, that it's hard to find the extra money for.
Get our custom envelope printables here:
Additional notes and tips:
- If you have a long month (one with 5 weeks), DON'T give yourself more money, just divide your budget by 5 and be prepared to live a little tighter that month. Have some self-control, people!
- Try cutting your budget down a little to begin with. You probably spend money that you don't need to be spending on little things, that could really serve your family a lot better if you put it in your slush fund and put it toward BIG, long-term things.
- Keep EVERY receipt for the month in your envelope, so if you lose track or need to return something you have everything right there.
- If you bring home extra money in a month (bonus, extra commissions, extra paycheck that month, etc.) DON'T alter your budget! There is absolutely no need! Put the extra money toward debt, put it in your savings, or put it in your slush fund. Don't go out and buy more groceries with it, that is noooooo fun. Be wise with every dollar you bring in.
- You need to get creative with how you spend money on groceries. Click HERE for a full tutorial on how I save 1/2 every month without clipping a single coupon. Additionally, click HERE for lots of cheap meal ideas, how to not waste food, and more.
- Open 7 bank accounts. "Whaaaaat?! Hold the phone! Put on the breaks! Sound the alarm!...SEVEN accounts? Giiirl, yo' mus be ca-RAY-zay!" Ok, maybe I am. But I will promise you something: by opening multiple accounts, it WILL make your life easier. Watch the video below, or click HERE to watch it online.
Click HERE for all the details, how-to, why's, and info.
By following those simple steps you will save your family more than you can imagine. Likewise, no matter what you're bringing home paycheck-wise, you will know EXACTLY what you spend each month.
Let me know how this works for you, and have a great weekend!