How to budget
The most important thing to remember when working this budget is to do it. Discuss the finances with your significant other and agree on spending and saving together. This budget is to be done before every pay check.
You will need a calendar, a pencil, all your bills, about 10 envelopes and an estimate on things you will need money for, (gas, groceries, entertainment, birthdays, car maintenance, house maintenance etc.)
- Save website login page to favorites in a folder named Bills. It will be easier to save them in the order of when they are due. If you haven’t already created a login for your bills it will be a good idea to do. That way you can log in and monitor your accounts.
- Figure out what your income is and how often you get paid. Example:
- $1,500 every two weeks
- Circle your pay days on the calendar
- Write the name of the bill in the day that it is due
- Create a spreadsheet:
- List all your bills for the month in the order of when they need to be paid. Going down the column, Include Bill name, Date Due, Date it was paid and the balance remaining.
- Fill in the spreadsheet: For the bill name you will insert the amount due. For Due you will fill in the date that the bill is due. For Paid you will insert the date it was paid. And for balance you will insert the balance remaining after the amount paid has posted. (Note: for balances, the amount due will not be the difference of the previous balance minus the amount paid because the interest due will change as the principle is paid down.)
- You may color code to make things more easy to read. The dates paid that are in green have been paid on time. The dates paid that are in red have been paid late. So, your goal would be to have no red on the page.
- On the top insert your pay date and underneath insert the total amount of the bills that need to be paid from that paycheck. Color code the following items to have the same color: the date you get paid, the total amount of the bills that need to be paid from that pay check, and the bills due date.
- Work your envelope system
- Label envelopes for things you will spend money on Example: Gas, Groceries, Cleaners, Car Maintenance, House Maintenance, Birthdays, Entertainment, Christmas, Vacation, Medical, Charity, New Car, New furniture, Kids Allowance, Child Care, etc.
- Figure out how much you will have for the envelopes: After you figure how much your bills will be, subtract the bills from the amount of your paycheck. Example: Jan1 paycheck will be $1,500. Bills for that pay period will be $1,000. $1,500-$1,000= $500. So now you will have $500 to distribute into your envelope system.
- Distribute money to envelopes. Start with the necessities. If you know for sure that you need $75 for gas every two weeks then make sure you put that in first. If you know that it is time to get an oil change put the money for the oil change into the car maintenance envelope. Do the non-necessary envelopes last. And don’t forget to put money into savings. The amounts will change from pay period to pay period.
- Save for big ticket items: If you know that you will need to buy a big-ticket item soon, then plan to do so. First, shop around for the best deal. Remember that cheaper isn’t always better. Know how much it will cost. For example, you will need new furniture that will cost $2,000. Next, figure out when you will need the item. Let’s say in three months. You will have 6 pay checks until then. $2,000/6= 333.33. So, you will have to save $333 every pay check to buy the furniture. And sometimes you can put a small amount towards an envelope even if you won’t spend it for that pay period. It just means that when the pay period that you will need the envelope comes, you will already have some of the money needed and won’t have to budget in so much at one time. Like Christmas, birthdays, vacation, or even car maintenance.