Continuing with the "How Do I" series, today I'm writing about how I budget. Please remember that this is how I do it, not how everyone should do it. Please read my words carefully to make sure that you understand. If you have any questions, please leave me a comment or email me.
There are many ways to budget from simple paper methods to complicated spreadsheets. A few years ago I tried the paper method and it did not work for me. I'm sure it is great for some, but I needed something that I could move and play with more easily.
Currently, I'm using a spreadsheet format. It is VERY detailed! I encourage people to put categories that you actually spend money on, not what you "hope" it will look like. Example: I have a category for my hair and other salon services. It varies month to month because I don't get my hair done each month. On the months that I don't get my hair done, that money goes into another category (if needed) or it goes into the savings category. This month my electric bill was about $99 higher than I anticipated. Since I'm not getting my hair done this month, I simply moved that money over there and it almost covered the difference. Worked out beautifully. In your budget you need to be able to move some things around. Your bills (unless you are on an average) are not going to be exactly the same every month. So, you will need to plan for the cold months and, if you are a fellow Texan, those super hot summer months too.
Crown Financial has an envelope system that they promote. Again it works, however it was not my favorite. It may be the solution for you. Regardless, it is a great bible based study and you should check it out! Go HERE to learn more about Crown Financial.
The Dave Ramsey Plan...you all know that I heart Dave! He is big on having a written budget. I'm pretty sure 100% of financial advisers are. He just makes it easy to understand. He also promotes a cash envelope system. Go HERE to learn about the Dave Ramsey Envelope Plan.
Can I be honest??? We don't use cash...I know SHOCK! I have this problem of losing cash. Weird, I know. You are probably thinking that I am the cheapest person and yet I can lose something like CASH! Most recently I found $900 cash that had been lost for almost 2 years. I change purses and bags so often that I just can't keep up with it.
Luckily, my hubby and I are the 1% of people who can use a credit card and NEVER have a balance. So, we use a cc and a debit card and pay the cc off every month. We use a card that pays us cash back and has no annual fee or penalty for paying it off each month. In the event that we do get penalized or they want to charge a fee, then we will stop using the credit card completely.
I'm not promoting this is a good idea for anyone who is in debt. You should stop using your credit cards, for sure! However, if you are not in debt and make up the other 1% of people then it is not such a terrible thing. I agree with Dave when he says that credit card companies are like snakes just waiting for you to slip up. I've had a credit card since I went to college at 18 and have NEVER HAD A BALANCE that I didn't pay in full each month, so I'm confident that we are okay.
Why not just use the debit card?
Last year we were able to purchase new tires for my car with the cash back money that was built up from the credit card. It works for us. Again, I am not promoting cc usage if you are in debt or carry cc balances. Please understand that.
We do abide by the "envelope system", but in a different way. My envelope comes out of each category in my budget. Example: When the budget is down to zero on the eating out column, we don't eat anymore! Same concept of when the envelope is empty, you have no more cash to spend. Am I making sense?
I hope that how I budget did not confuse any of you. Budgeting takes a few months to conquer. Don't get frustrated and quit after the first month. You can do it! It takes some moving around and being honest about the money that you spend. I encourage you to sit down with your spouse and make sure you both agree and understand how it is going to work. In our family, I am the CFO (Chief Financial Officer) because it is a gifting that I have. We have switched off this role a couple of times in our marriage. It just works out where I enjoy it and feel like God has given me the gifting to do it well. That doesn't mean that my husband doesn't know what is going on. He knows where all of the money goes because he looks at the budget too and helps me pay bills. There is nothing that comes in or goes out that he doesn't know about. We are a team and partners in this! I've found that if you are on the same page and have the same game plan that there isn't a need to argue about money. Isn't that great!
Just remember that budgets never fail us, we fail our budgets! Best of luck to you all. I can't wait to hear about your success!
In His Grace~
SHO
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