When I was single, money was not important to me. Oh, yes, it was important in that I knew I needed it to pay the bills and eat. But I didn’t care about it enough to keep track of it or make sure it was getting distributed properly among all my needs. I know I wasted a ton of money during this time because I just did not care to pay attention to where my money was going.
But oh how things change when you get married. Not only do you start caring about where your money is going, but start a focus on savings and deciding which areas of spending are most important for the collective you. Enter today’s experiment: Budgeting.
“Budget” has always seemed like a dirty word in my mind, not because I have a dislike of order or plans, but because in my mind it implies hard work and effort. When my husband and I got married and started using a budget, we went the easy route, which I want to share with you today. This is a no stress, no fuss way to figure out where you want your money to be going.
Step One: Calculate Your Expenses
For the first two or three months before you actually write out your budget, keep all the recipes of everything that you spend. Tally up how much you are spending in various categories such as “Rent,” “Food,” “Entertainment.” Calculating your spending over a couple months will help you to see where your money, generally speaking, is going. This will also give you the basis for your budget.
Step Two: Create a Rough Draft Budget
No pressure here. This isn’t your hard and fast money boundaries budget yet. Simply list all the titles of your expenditures and how much money you have been allotting towards that direction. Use your expense calculations to help you see your average spending.
Step Three: Create a “Zero-Based” Budget
This way of budgeting has been popularized by Dave Ramsey. Take your income for the month and allot the money into different categories so that by the time you get to the bottom of your budget lists of expenditures, you are left with zero dollars. Budgeting this way allows you to allot money to savings, personal fun money, as well as your monthly expenditures. My family also breaks down expenditures that only happen once or twice a year by putting aside a little from each month’s income. Here’s a fictional example:
Monthly Income: $500
Charitable Giving: $50
Household and Cleaning Supplies: $50
Eating Out: $25
Car insurance: $15
College Fund: $50
By subtracting the money in each category as we go down the line and “pay” each line item, we end up with $0 at the end, which means we’ve successfully given every penny of the monthly income a purpose. In our personal budget, we always pay what is most important to use first so that “leftover money” after paying the bills goes toward more frivolous expenditures.
Step Four: Use the “Envelope System”
At the beginning of each month, my husband pays all our bills and then hands me a wad of cash. That cash is then placed in separate envelopes according to where it is going to be distributed: food, children’s clothing, gas, etc. That is my money to spend on the household for the month. If it’s gone, it’s gone (not really, my husband gives me a lot of grace). Really, it helps me to make wiser decisions about where I’m spending my money. It is so much easier to swipe a card without regard for how the money is getting distributed than to actually count out my bills from the individual envelopes. Simply paying for things with cold hard cash is a money saver.
These are the basics of budgeting. You can get way fancier, but I personally cannot handle anything more complicated than what I’ve just shared with you. It works for us and now we know where all our money is going. No more wasting the hard-earned dollar.
How do you budget? What are your tips for someone starting out with a budget?