Have you ever wondered why, how, or when anyone ever gets around to budgeting? Well, my husband and I have now successfully budgeted for more than half a decade and we believe it is the biggest reason that we have been as successful in marriage and finances as we have. In this series, I will be covering not only why you should budget, but also how and when to budget. I know that this is a topic that isn’t always fun, but I think a necessary part of adulting.
Last week, I wrote about why we should budget. This week I’m going to talk to you about how we budget.
A Three-Part Series-Part 2
Practically speaking, I recognize that there are radical differences between all of us in the way that we get paid, the frequency, and how much the paycheck flexes. Some of us are on salaries, others of us are on seasonal work, and so on and so.
For the simplicity of this post, (as I am only doing a brief overview of budgeting) we focus on incomes that are relatively the same each month. I will do my best to explain how we budget. First, I will say that we get paid the same salary each month via my husband Bernd’s business. We also include any child tax (which is money the Canadian government gives us each month based on income) that we might receive in our budget. Secondly, we do choose to pay ourselves a smaller salary each month, thus the business takes care of some of our expenses, and they are not included on my budget sheet.
For the sake of example, let’s say we get paid $2,000.00 each month and we get paid two times per month on the 1st and the 16th. (I should also mention that we create a budget for each pay cheque so one for the two times a month.)
How We Budget:
1) We sit down together once a month as a team.
2) We look at the calendar to see what the month will hold.
We take our $2,000.00 and divide it between the month. We, personally, do not divide it in half as our payments are pretty lopsided, with the last half of the month being pretty heavy. We deal with that by not spending all of our money in the first half, thus saving what we need for the second half.
3) We try to be open, honest, and in agreement with all money decisions.
For us, this means that we both know what kind of expenses we have coming and we have the same goals. There is no desire in either of us to overspend in any category, as we have made the decisions together to handle our money the way we do. That doesn’t mean it always easy, but it does mean that we are in it together. This is also the time that we take to discuss any outings we’d like to do or anything we’d like to buy.
4) We pre-spend every dollar on paper before the month begins.
(The exception for us, is that we do keep a $100 float at all times. This, however, isn’t free money, ’cause if I spend it I’m going to have to replace it) We do, however, pre-spend all our expected earnings for the month, keeping in mind any events, shoes, clothing that we might need or want. Not every category will get money each pay period, it all depends on what’s needed.
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