How do you budget?

[kimmy4433]

I need to create a budget, but really have no clue where to start. Do you use an online budget system or did you make your own in excel? Also for any of you whose SO does not bring home a set amount a week how do you factor that? I bring home X dollars every two weeks. DH (licenced Plumber) and brings home anywhere from 475 to 1200 a week. I have tried to average it out, but the average is around 650 a week and that does not help on the weeks he brings home less. Should we just put his checks in the bank until the end of the month or does anyone know a good way to budget his pay? TIA

[Momto2Boyz]

DH is our only paycheck in our house and I just base his on the lowest amount he might bring home (which for him is a 40 hour week minus taxes). That way, when he gets over time (which is just about every week) that money is extra and can go into savings, becuase it wasn't accounted for in the budget to pay bills.

I simply made a spread sheet on my computer which tallied all my bills. I have a column for budgeted, a column for actual, and a column for overage. I sit down at the beginning of each month and put in my budgeted number for all of my bills (mortgage, electric, gas, cable/internet & cell phones...and water bill which comes every three months), then I have another section for other monthly bills (savings transfers, gas, groceries, stockpile (which I keep seperate from my regular grocery bills), entertainment/allowances, meals out). There are a few other things, but I'm trying to do it from memory!

I put in my budget amount, then as the bills come, I fill in the actual amount. At the end of each week, I write in the overage amounts and that money all gets transfered over to savings.

Hope that helps a little! For having worked in accounting for most of my career, my budget is a little haphazard! Just trying to stick it to the man...I don't have to do it their way anymore! But, it works for me!

[kimmy4433]

Thank you!! I will give it a try starting with August!

[Greebo]

To start budgeting, begin by reviewing your expenses for the last 3 months as best you can and identify every area in your life where you spend money. Categories will include:
- Groceries
- Takeout/Delivery/Dining out
- Rent/Mortgage
- Utilities (list each)
- car payments
- Insurance payments
- debt payments (list each)
- savings
- giving

There will probably be more.

What you want is to get an IDEA of how you've been spending your money. It won't be perfect, and you'll miss some items probably, you just want a good honest guess. Just list out all the categories and make your best guess at a monthly average. FOr things you pay quarterly or annually, you want to make sure you remember them so you can save up for them.

Now, list all those expenses by order of descending priority - that means most important on top, least important on the bottom.The top five categories are: FOOD, Clothing, Rent, Transportation, Utilities. Next are the things you HAVE to pay - bills, debts, etc. Finally are the incidentals - things you have a choice about. Do this now for August - as august nears the end, do the same thing for September, and so forth.

Ok - since you have an irregular income, what you do is each time a check comes in, you start at the top of the list, and you spend the check in order of the prioritized budget. For example, if your food budget is $400, then you set aside $400 and put it in an envelope (or you can keep it in the bank but you have to be SURE you won't spend it EXCEPT on groceries!). You go all the way down the page filling in how much you spent, until there is 0 left from that paycheck. When the next check comes in, pick up where you left off.

When you reach the end of the money for the month, you draw a line - and that's the end of what you can spend. If you run out of money before you run out of month, then its time to go back to the budget and readjust the spending where you can to cut back. If you can't cut back anywhere, then you need more income.

Now if you run out of month first and have money left OVER, that money goes to pay off debt.

[IntlMom]

oh you guys are good! we have tried a formal budget so many times, I cannot even begin to tell you! we just pay our bills that we have (I know about how much they will be each month), keep our spending to where we know it needs to be, and either save a large portion each month, or put a large portion to our mortgage each month.
I know, lame, huh??? It works for us, however.
Good luck!

[kimmy4433]

Greebo!! That is great! I will try this too!!

[DonnainME]

I just made a spreadsheet. Since our only income right now is my business, it's based on a % of sales. It's really hard to budget.

What I did is print it out - monthly budget. I also have the things prioritized. I.E, auto gas is #1, Electricity is #2... We get assistance from the state (food stamps only) and that is a God send so we don't have to budget for food. When I get my commission (after customers pay and after I pay my company I get to keep the rest) I look thru the budget and pay what I can - leaving a little left in the bank for emergencies. This happens every 2 weeks. One campaign I may make $300 but the next I might only make $50. We need just over $600 to pay our bills - but that is with NOTHING extra. Sometimes we have to juggle.

[peanut]

Well we do it a bit different. We tracked expenses for 3 months and divided by 3 for monthly budget. Then added all our yearly expenses, and divided by 12, and added it to the monthly budget.

We divided everything into budget categories, or areas of spending. I 'prioritized' them (as Greebo would say) into 'discretionary' (optional expenses - wants not needs) and 'non-discretionary' (needs).

We have to pay the non-discretionary every month...so I really work on getting those as low as I can. For us it meant rearranging our utilities and talking to the bank about our mortgage, etc. We switched to a different phone plan, adjusted how we used electricity and natural gas (lower temperatures, turned out lights, etc.), and actually came up with extra cash to put down on the mortgage, paying it out six years early.

By focusing on each budget category one at a time to cut costs, we were able to save a significant amount of money and get ourselves out of debt. It's put us in a very nice financial situation right now...for the most part. At least we have mostly goals and no debts!

Hope that helps.

Jean

[Starlight9803]

oh you guys are good! we have tried a formal budget so many times, I cannot even begin to tell you! we just pay our bills that we have (I know about how much they will be each month), keep our spending to where we know it needs to be, and either save a large portion each month, or put a large portion to our mortgage each month.
I know, lame, huh??? It works for us, however.

This is like what we do. DH's income (our only one) is variable, and doesn't average out well (the average would really throw us off when it comes around to the months where the whole month is slow) We just pay our bills as they come in (taking out 10% of every paycheck for savings), then at the end of the month, all the leftover money gets snowballed onto the debt that we are currently working on - or savings/extra mortgage payments if we're not concentrating on a certain balance.

[Libby]

I do it a mix of ways depending on mood and how much cash flow LOL hows that for a budget?

Seriously though, I take a scrap paper and scratch it out by hand at the kitchen table, coffee table or while on the couch with my trusty calculator.

I write down how much my paycheque is/will be - rounding down by $10 so I dont overbudget. Its not a 100% fixed amount each cheque but I can lowball it to the minimum to be able to budget.

Then I list the "categories" that MUST be paid from each cheque (once or twice a month):

* Credit Card (cell, internet and monthly recreation centre fees for swimming) - once monthly if doable
* Line of Credit - twice monthly until its gone...and boy is it sure on its way out!
* Car Insurance - once monthly
* Long Distance - once monthly
* Gas - twice monthly
* Grocery - twice monthly
* Savings - which I admit to not contributing to b/c I'd prefer to get out of debt faster. Once the LOC is paid off, those payments will snowball right into my savings account - would be twice monthly
* Spending (if anythings left LOL - usually $10-$20) - twice monthly
* Balance/EF - Its usually no more then $40/paycheque. This is my lil way of making sure I have a 'float' incase I short paid something or something comes up last minute...I take it out of this amount vs using credit card. When I get paid the 2nd time in the month, I toss this amount into savings or on a bill and then make another 'float' from the 2nd paycheque.

Sometimes I will make another 'category' for something I am saving up for ie a trip or weekend get away. (M-I-C-K-E-Y-M-O-U-S-E!) Dunno when I'll go but atleast it will be pre-paid right?

Also if I need to pay something off, I will 'borrow' from another category to pay off more of a debt. IE - cut the gas and grocery budget down to make that extra payment etc.

[sdrjeolsen]

I do mine in excel, but then transfer it over into my quicken prorgam. I typically keep 3 months ahead in quicken. So I put in paychecks, tithes, mortgage pmts, a gas, utility and grocery alotment, etc. That way I know at a glance how we are doing and if I need to cut anything.

[ladykemma2]

don't forget to budget in car maintenance, and home upkeep.

the annual things:
school startup
car registration
car inspection
car maintenance
home owners association
home repairs and upkeep
trash collection
flood insurance
computer license upkeep
new computer fund
new car fund
vet bills
xmas
a/c/furnace inspection
optometrist
dentist
travel

[Mom23boys]

DH is our only paycheck in our house and I just base his on the lowest amount he might bring home (which for him is a 40 hour week minus taxes). That way, when he gets over time (which is just about every week) that money is extra and can go into savings, becuase it wasn't accounted for in the budget to pay bills.

I do the same thing with DH's checks. He occassionally brings home overtime pay, but I base our budget on his lowest amount that way if he doesn't make overtime, then I am not stressing. My pay is the same every month, so no surprises there.

I use a paper and pencil budget which seems to work for me. I think Greebo gave great advice on how to set up your budget. Good luck!

[hugxlaughxsmilexlove]

I use paper and pencil too.. well, usually type it all up.
I keep track of every single bill - anything left over is for savings or extra debt payments!

[MomToTwoBoys]

I was trying to do a monthly budget but with DH being paid at different weeks, plus a second income from me coming at two different times a month it was really hard. I then went with a suggestion that Greebo gave in a previous post and started budgeting every two weeks. This is how I do it now:

July - DH gets paid on the 24th and that cash goes towards bills due before August 7th. I also put cash that I get on July 18th, 25th and August 1st to bills that are due before August 7th.

August - DH gets paid August 7th and 21st. Any bills that are due between August 7th and 21st are paid. Any bills due between August 21st and September 4th are paid with cash from August 20th, 21st and September 1st.

It's really super complicated but here is the jist:

1) I add up all of the projected income from July 18th to August 1st, August 2nd to August 19th, then from August 20th to September 1st.

2) I list the bills and the dates that they are due. I separate those bills. For example, if I have bills that are due on August 1st then I pay them out of the cash from July 18th to August 1st. If I have bills due after August 1st but before August 21st, I will pay those with the income that we get after August 1st.

3) I budget September's bills using the cash from August 20th/21st and September 4th.

All of our bills come in two chunks: due around the first and due in the middle of the month. I simply separate all the income we get and pay the bills that correspond to those income periods.