When my husband and I was first starting out (almost 18 years ago), we never had any money. Payday came and by the next day we were broke and another bill would come up and we would have to wait until the following payday to pay it. When our first daughter came, things got a little tougher. I mean, we knew what bills we were paying but it took us a few years to start to get a hang of all this adult stuff. Who knew when you grew up, got married, started a family and living on your own could be so difficult?
But it doesn’t have to be.
When we had our daughter, I gave up working and became a stay at home mom. If I continued working we would have had to put her in daycare and after doing our research on costs where we lived at the time, we came to the conclusion that we would actually be saving money if I just stayed at home. So that’s what I did so we were living on only one income.
First step is to figure out how long you want to budget for.
My husband (until about 6 or 7 years ago) was always paid bi-weekly. So the length of our budget was easy. It was going to be a two week budget. And even years later when his income became weekly, we still continued to stick with a two week budget. For example, we are almost a week into our current two week budget. On Friday my husband gets paid. His direct deposit will be left alone until next Friday when he gets paid again. Then we will start a new two week budget. We have always been used to that and it makes it easier when paying bills for the month because we know which bills we pay in the first half of the month and what we pay in the second half of the month.
Second step is to figure out your net pay.
What I mean by this is your take home pay. Figure out your net pay for your budget period. Ours is easy because the only true income we have is my husband’s pay from his employer. I sometimes have some cash come in here or there from blogging, etc. but it just goes in as extra because it isn’t constant.
Third step is to write everything down.
If you are just starting a budget, make a list of all the bills you pay and come up with an amount that you would normally spend on groceries for that budget period. We do our major grocery shopping once ever two weeks. We always use the same budget amount every two weeks and always budget $50 more than what we normally spend. That way if we need to spend a little more than usual, it will be covered by our budgeting grocery amount. If we don’t, then the extra that was budgeted goes back into our extra funds pool.
Along with this, determine what things need to be paid in order of importance. Bills obviously need paid. You need to pay your rent/mortgage and you need to have electricity and water. Your extra bills like cable or phone are secondary. Food is your next important bill. This should come between your important bills and your secondary bills. You need food before you need to watch TV. You also need to consider extra household items like toiletries, etc. For us, those kind of items are included in our grocery bill along with dog and cat food. Lastly, money for fun stuff. If you want to go to a movie, etc. We actually don’t even budget for that though. We budget everything else and whatever is left after all that, then we have fun money.
Fourth step is to consider annual bills if you have any.
Say you have property taxes that are paid yearly. Find your yearly amount and divide it by 12. Then take that amount and put it aside each month in like a savings account. That way each month you are putting money back so you don’t have a huge bill at the end of the year.
Fifth step is to figure out which bills get paid per budget.
We add up our bills and split the bills between the two budgets we do each month. We make the bills pretty even so that we are paying an even bill total each budget. That way one half of the month isn’t too heavy and we have a good balance all month long.
Here is an example of our budget.
First two week budget
- Bill 1
- Bill 2
- Bill 3
- Bill 4
- Bill 5
- Savings (which is for an annual bill or holidays)
- Whatever is leftover is fun money
Second two week budget
- Bill 6
- Bill 7
- Savings (Which is for an annual bill or holidays)
- Whatever is leftover is fun money
As you can see above, our first budget has more bills but that is because we have more smaller bills like Netflix that half of the month. We may have more separate bills during that one but the total amounts are about equal with the second half of the month.
If after our budget is taken care of and we don’t have a whole lot of extra money for the next two weeks, we might skip on the savings for that particular budget. We plan for a savings for both budgets instead of once a month because it’s easier to break up the savings amount we set for our self.
If you notice, I don’t have a budget amount set for extra things we may need like clothing items or shoes. That’s because we use the fun money for those kind of things. So that is how we budget. It’s always the same every time and we know what is coming out each time. Of course there are some bills that fluctuate a little like electric or water so we just make adjustments here and there if needed. We have stuck to the same thing for years and it works well for us.
Don’t forget to keep a ledger for your budget. I used to write everything down or write it all in the checkbook but we keep a ledger on the computer. It’s just easier that way and easier to catch mistakes.
Happy Budgeting! (If there is ever such a thing).