I'm learning to tweak the system in new ways. Ways that'll help us be on top of our game at the end of the month.
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I did this just as a mental game for myself. I have myself tricked that we have less money to work with this month. In the past, when I've left any money unbudgeted, I've spent it in my brain in multiple places until I find myself in trouble. If I think there's extra money, I spend like there's extra money, but this month, because I think there isn't enough, hopefully there will be extra at the end of the month and even more can be added to those accounts that have been drawn from.
I know in some of the previous posts I've given specifics about this process, but if you haven't read any of those, here's how it shakes out.....
Create a spreadsheet and document your expenses (this is a partial snapshot of what ours contains):
- Income - we do his, mine and other and then I total them all
- Fixed expenditures
- Insurance - detailed homeowners/renters, car, life, property, etc.
- Savings/investments, etc.
- Variable expeditures
- Utilities - I detail these: electricity, water, garbage, etc. They each have their own line.
- Household operation expenses - again, detailed: lawn/garden, fridge water filter, etc.
- Transportation - oil changes, repairs, etc. I also just added a "new car fund." There isn't any money budgeted for that yet, but when we've decided that that will become more of a priority and set a goal for what we think would be sufficient for our family, we'll start stowing money away for that as well.
- Birthdays/gifts - I put every person in the family's name on their own line.
- Pocket money - This is just for me and the Warden. We have a completely separate account set up at a completely different institution for our children's savings, etc.
- Personal care
- Special expenses - This includes sports, Christmas, etc.
- Miscellaneous - I even detail this--future ACT/SAT test fees, Christmas cards/postage, EFY, etc. This, if left undetailed, will fall under the same category I was describing above. It would be like unbudgeted dollars, and I'd spend it over and over again without hesitation.
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After you set up your categories, go through past records and find an average of how much you spend on each thing. This can be rather time consuming if this is your first budget. The first time I set it up, I went through the three most recent months' bank statements and figured the amounts from that. It might be an even better idea to look at statements that came out three months from each other just to give you an idea on seasonal spending.
The only company I found that wouldn't go for this set up was our life insurance company, which is a yearly expense. We used to just pay it when our tax return came out, but now I took the total amount, divided it by twelve and have my bank automatically transfer 1/12 of it to a special account each month. It will accumulate there until I need to pay it. That way if, by chance, there is no tax return, we can still pay it without sweating it.
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Recently, just to make things easier on myself, next to each category, I have added a line for how that particular bill is paid. There are some I use my bank's online bill pay system for, there are some I use that institution's autopay feature for, there's one I pay with a check, and the others are cash.
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I total how many of each type--how many 100s, 50s, 20s, and so on--I need. I then figure out how much money that comes to both individually and collectively, print it out, and head to the bank. At the bank, they ask for my account number and my photo I.D. I also have to sign for the money before she goes to count it out. She counts it in front of me, puts it in an envelope, and I'm off.
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That's about how it goes. I love that when I go to my bank statement and see the same few things paid there each month. I love the lack of guess work that this creates. I love knowing where I stand financially at any given moment.