Staying on Budget

For people who love money.

Every Income Needs to Budget – No Credit Card Payments

Too many bills and not enough money.

I have lived on a budget that covered my bills and left me with about $20 for food that needed to stretch for two weeks and I have lived on a budget where the entire second income was considered extra.  I have to tell you both are hard in different ways.

I was in college working part time and going to school full time with rent, utilities, car insurance, gas, books, etc. as bills. I had a choice to make. I could go full time at my job and continue with school full time at night or ask my parents for help.   

Fate intervened in this case because my mom came to visit me. We live about 200 miles apart. I was at work when she arrived and went looking for a snack. Ha! What she found was minute rice, peanut butter, canned beans, and ramen noodles. Next, she went to the refrigerator where she found mayo, ketchup, mustard, and a pitcher of Britta water. I was not around for her frenzied freak out but she informed me later quite thoroughly.  She filled my cupboards with more staples such as bread, pasta, canned vegetables, etc. and my refrigerator with a few basics such as milk, butter, cheese and lunch meat. 

She went home and told my father the way I was living and after dinner that night he took their leftovers and put them in the freezer. My mom asked him what he was doing and he said, “feeding Christin”. I visited a couple of weeks later and to my surprise I had a cooler full of freezer meals to take home with me. We lived like this for a couple of years and then my car gave out. I opted to work full time and finish my last bit of school full time at night so I could afford a new car and food.           

This was my first budget at the beginning of the month:

Let's talk about what you see above:

Income Column

The income column is the total amount of money I brought in each month.

  • From SAV: Money from my savings account.
  • Person 1: Money I earned from employment.
  • Carry Over: Money I saved from one paycheck to pay the bills in the next paycheck. The first of the month required more money than I brought in so I needed to save money from my second paycheck to make sure that the first of the months bills got paid in full.
  • Other: Consisted of bonus pay, gifts and tax refunds. Essentially any money that I did not earn but received was considered “Other”.

I totaled my “Income” column, in this example it amounts to $562.50. Next I check to make sure it matched my “Budget Total” column. This is an example of a zero based budgeting system. Every dollar is accounted for.

Payment Method Column

The payment method column tracks how I paid my bills. At this time in my life I did not pay my bills on a credit card so everything came out of checking. If I had “To Savings” as a payment method I moved this amount to my savings account until I needed it.

Category Names Column

Category Names are vital to having a successful budget. They describe the money you plan to spend. Most of my category names are obvious. I also created buckets for others such as “Entertainment”. I considered this movies, dinner out, bowling, coffee bar, etc. Try not to include too many items within the same category name. If too many spending items encompass one category it might be hard to see where you are spending large chucks of money.

 Sometimes it makes sense to break something out on a granule level to determine where the bulk of spending is is happening within a category. The “Entertainment” category might be too broad. Let’s break it out into more categories such as: Breakfast Coffee, Lunch Money, Dinner Out, etc. By breaking this out you will know how much you are spending on these items and where you might want to cut back.

It is important to plan where your money is spent to make sure it doesn’t just disappear.

Budget Column

The budget column is the amount I allocated to each category per pay period based off what I spent in previous months. This number MUST match total income brought in for the pay period.

Actual Column

The actual column is how much I spent in each category. I added this column so I could get a good picture of how much I spent for the two weeks. This helped me plan my next budget. I analyzed my spending habits every three months to see if I needed to make adjustments to any of the budget categories.

Remaining Column

The remaining column is money I did not spend or amount I over spent. I am sure you are wondering why I felt a need for this extra column. The reason is because I needed to know how I did overall with a quick glance. This column quickly tells me if I ended the two week budget with a gain, balanced or a deficient.

End of month budget example:  

In this example I came out ahead for the month.  I would add up the $5.07 and $21.22 and place the total $26.29 into my savings account.  I would usually spend this money on “Entertainment” eventually.  Sometimes this extra money was pulled from savings when I had a bad month and “blew the budget”.  It happens to all of us. There is always next month!

Actual Monthly Spending

I used the actual monthly spending sheet to track my monthly spending. Without this snap shot I would not know what I typically spend in each category each month. It would make it impossible for me to set a realistic budget each month. 

When you create your budget for the first time you will have success and failure but with this sheet you will get it down to a science year after year.  

Try it yourself!

I created a google doc where you can create a copy in your personal google drive to customize your monthly budget. Once the google doc is open go to File > Make a Copy > OK. You must be logged into your google account in order to save this document in your personal google drive. Then start to edit in your own private google doc. Please note once you make a copy I cannot see it so don’t be nervous because your information is NOT on display for the world to see!

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It is fun to think that there might be a short cut but the reality is planning plus diligence equals financial freedom.

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