Get it? Ha! I crack myself up.
So I’m feeling the urge to have a little chitchat with my online pals about moolah. Budgets. Making ends meet. Bringing home the bacon, and cooking it too.
Recently, I found out one of my good friends is totally clueless about her finances, and I was shocked. She’s a smart chick, and hearing that she’s totally in the dark (and stressed) on her money issues really surprised me. I don’t want to be the pushy friend who’s like “OK, sit down, let’s do this”, but I can talk about it here and maybe it’ll help someone else.
I feel strongly (is strongly strong enough?) that having a budget is THE ONLY place to start to get a clear financial picture of what’s going on now and where it’s taking us, because our finances are definitely taking us somewhere. Unless you’re the rare family who spends *exactly* what they earn, our finances are either taking us forward in life, with savings and nest eggs, or they’re taking us backwards with overspending and maybe even debt.
I’m a huge, huge, HUGE proponent of budgets. I’ve had one pretty much from the day I got my very first “real” paycheck and we definitely have one now. I look at it almost every day to see how we’re doing.
It’s nothing special – just an Excel spreadsheet that’s been tweaked through the years. It’s a budget, but maybe more importantly, it also tracks our spending.
The starting point is actually the tab that shows our official budget, starting with our gross income, all our paycheck deductions (and what percent they represent of our gross income – good to know, peeps), and then it calculates our net income.
Further on down the page is our expense budget, starting with the “basics” – preset expenses like our cable bill and intended expenses like how much we (want to) spend on groceries. I have our mortgage payment broken out because insurance and property taxes *change* every year! You knew this, right? Usually they go up….this year they went down. I also have our expenses color-coded by what could get cut first. Red text is essential; black text is stuff we could cut if we had to.
Next we have a category for our vehicles. There’s a saying that you should only finance a car one time in your life: your first car. Once it’s paid off, you keep driving it and set aside what used to be your monthly payment until you have enough to pay cash for your next car. Paying money to borrow money SUCKS (unless you’re the lender!!). We try not to do it, so we have a line for ‘savings for our next car’ in our vehicle expenses. We also include our yearly registration costs, insurance and gas.
“Other vehicle expenses” is what I estimate it will cost for two oil changes per car per year, new wiper blades each winter, and a contingency amount for those annoying little extra repairs that pop up now and then. (New tires or a “steering fluid flush”, anyone? Ug.)
Finally, we have the “Misc/Discretionary” expenses. These are things that can (and would) be cut first if necessary: Gifts, Christmas, Vacation, Travel and Fun/Eating Out.
Next to each category is the percentage of our take home income it represents. I like to know how much we spend on our necessaries versus how much we spend on the extras.
Knowing where and when the money comes in, and how it’s spent is just plain HUGE for my peace of mind. Late fees? Overdraft charges? Interest on credit balances? These things seriously FREAK.ME.OUT – like I probably have some kind of mental issue, they freak me out so much.
Obviously, I don’t make all the decisions as to where or how our funds are spent, but I do all the tracking of it and I’m the “enforcer” (the cute, friendly, kiss-on-the-cheek-honey kind) when the budget is approaching oblivion. Or when we might go over in a particular category.
SO. Everything we spend falls into one of those categories.
This is Step #1 for being on top of our finances (and not letting them be on top of us). Knowing actual income – to the dollar – and intended outflow. Step #2 is knowing actual outflow – to the dollar. But we’ll get to that later.
Finally, at the bottom of the budget is the summary of how much is 1) deposited 2) spent and 3) saved.
It’s pretty major to see the single figure that represents your expenses for the *whole* year. Do you know what your family spends in a year? $20,000? $50,000? $80,000? More?
Do you know how much of that goes to tangible items? Payroll taxes? Food? Depreciating items like cars, boats, campers, etc? You can, and you should.
Do you have a budget? Is it working for you?
Is this helpful for anyone? If so, leave a comment and I’ll come back with some more. And, maybe, if anyone’s interested, I could even figure out how to provide an Excel template for your budgets.
Thanks for letting me yak about budgets. I *heart* them because not knowing who’s getting our hard-earned cash? Budgettabouddit!