The dreaded "B" word that absolutely everyone hates...
BUDGET.
I am in no way a financial expert, in fact, quite the opposite. I am embarrassed to admit that up until last year I was quite the financial mess. I didn't budget, I didn't track my spending, I made horrible financial decisions and I'm paying for it. Literally.
Jason and I lived together for 4 years before getting married but we didn't have a joint account until after the wedding. We just split the bills and were otherwise responsible for our own spending and let me tell you that was a disaster. I remember reading somewhere that the number one cause of marital trouble is finances, so you know me (a total spaz) I began to worry that if we didn't get our ducks in a row we were doomed.
Last year (2012), we made some financial changes that have really helped get us on track and have made a world of difference in terms of the "B" word.
1. We got a joint checking. Not to say this is the way to do it for all couples, but having a joint checking account makes paying bills a hell of a lot easier! It's also made us both a lot more financially responsible, when you're sharing money you tend to be smarter about what you're buying.
2. We communicate, a lot. I think this is the absolute most important thing you can do. We always tell each other what we've spent money on no matter how small the purchase so that we are both aware of where our account stands at any given time. Online checking also helps a ton because we are both able to check our balance on a daily basis.
3. We have separate accounts too. We have a monthly allowance that we give our personal accounts and we can spend that money as we choose, no questions asked. This also allows us to buy each other gifts without the other seeing the purchase come up in our joint account.
4. We use a super awesome spreadsheet that I created. A bunch of you have asked me for this in the past, so here it is!
January Budget
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Income 1:
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31-Dec
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15-Jan
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$2.00
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$1.00
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$1.00
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Income 2:
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4-Jan
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11-Jan
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18-Jan
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25-Jan
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$4.00
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$1.00
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$1.00
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$1.00
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$1.00
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Extra Income:
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$1.00
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$1.00
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$7.00
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Category
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Budget
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Actual
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Rent
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Comcast
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AUM
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Xcel Energy
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Sprint
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Centerpoint
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Banfield
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Student Loans
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Car Payment
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Car/Renters Insurance
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Lifetime
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Jason CC
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Kristin CC
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Medical
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Gas/Fuel
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Car Maintenance
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Target
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Food/Groceries
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Meals Out
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Coffee
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Champps
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Restaurant/Bars
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Entertainment
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Alcohol
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Misc.
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Kenley
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Bailey
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Clothes/Shopping
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Health/Beauty
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Gifts
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Basketball/Softball
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Fantasy Sports
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Home Improvements
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Travel
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Business Expenses
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Savings
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TOTAL
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Income vs. Money Spent
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*At the top I keep track of our income. I get paid on the 15th and last day of every month...so that top row is where I enter my paychecks.
*Jason gets paid every Friday, so the second row is where I enter his paychecks (don't worry, we both get paid more than $1.00)
*The next row is where I add any additional income we make; whether its side jobs, gifts, or whatever.
*The green box is a formula to keep track of how much money we have earned for that particular month.
*Next I list all of our monthly bills. I put the budget in the first column (this is based on the average we spent for all of last year) and then once I pay the bill I enter the actual cost in to the second column.
*The next chunk is for Gas and Car Maintenance...since this varies pretty drastically from month-to-month, Ii don't set a budget for it...I just track it in the second column.
*The next section is for all things we typically spend our money each month. We have set budgets for each category and work hard to spend within that budget. And, yes, Champps has it's own budget....we eat there a lot.
*Next we have what I call the roll-over category. We have a budget set for these categories but because they aren't something we spend money on every month (the Kenley category does not include diapers...it's essentially extra stuff for her....like clothes or toys) the unspent amount will roll-over to the next month. So for example...let's say we spent $100 on gifts last year, our monthly average would be $8.33/month which would be this year's monthly budget. Then let's say we only spend $6.00 on gifts in January...the extra $2.33 would roll over to February making the gift budget $10.66 for that month. Got it?
*The last category is things we don't spend money on very often or get reimbursed for (like business expenses and fantasy sports...when Jason wins)
*Finally, we track our savings per month at the very bottom!
This system has been working great for us! But, I found that in order to be successful you need to check your bank account and enter in purchases at the very least a few times a week. When you're looking way back it makes it more difficult to account and budget. You also need to be avid debit card users like we are. We very rarely have cash on us and if we do it will be for something specific so that we can add it to our budget in the proper category.
It was pretty eye-opening to do this for a full year and see how much money we spent in each category. It definitely has helped us tighten up our finances and set a stricter budget for this year.
I know this isn't for everyone, but if this has worked for me, it may just work for you!
Give it a try and tell me what you think!
Or share with me what works for you! I'm always interested in getting new ideas to add to my system!
