Budget. When I say that word how does it make you feel? Freaked out? Overwhelmed? Excited? Restricted? I am going to guess that over time you have heard many people talk about how important it is to have a budget. It’s important to know what you are spending your money on and to make sure that you aren’t spending more than you are making! However, the actual art of making a budget can be monstrously confusing. How do you make sure you cover all your expenses? How do I know how much I’m actually spending? Where do I even start getting all the information on my expenses?
Know that you aren’t alone in your confusion. I have had a budget that I ‘follow’ (I say that loosely as I’m not always good about sticking to my numbers, cause a good sale price always gets me) for over 15 years. But here’s the thing, my budget now looks WAY different than my budget did when I was in college. As my life and expenses have changed so has my budget. In the same breath I will say the importance of having a plan for your money (a.k.a. a budget) has only become more vital the older I get!
I’m not going to spend a ton of time trying to convince you that making a budget is a good idea for your family and marriage. That it is freeing to know that you have all your vital expenses covered and still have some money for doing fun things. And that the time spent making your budget is worth the hard work. If you have read this far in my post I’m going to assume you are ready to at least start considering the idea of making a budget!
If you don’t already have any sort of budget in place the process of gathering all the necessary information is going to take you some time.
Let’s be honest up front, this isn’t a quick process. Like I said before though, having a plan for your money will be worth it! Let’s start with the very first step in any budget creation – figuring out what you already spend.
This cheat sheet is a chart created to help you figure out what you spend over the course of a year on some of the main pieces of a budget (and is free to print so use it!). Your family spending may or may not include all of the items listed and if you spend nothing, happily put a zero by that item. In this day of the internet we have online accounts for almost everything so finding what you pay each month shouldn’t be super hard and if all else fails, check your bank and credit card statements to see what you spend.
- Many items you will pay a set amount each month so then it is easy to know how much you need to set aside for that in your budget.
- There are things that you only pay for once a year or every six months. Put those into your cheat sheet, but still make sure you still divide by 12 months. Your budget will allow you to set aside money every month so that when the time comes you have the cash ready to pay the larger bill in full!
- Utilities often vary by month unless you are enrolled in the budget plan (I highly recommend signing up for these if they are an option!) because what you use often changes with the seasons. Use your chart to record what you spend each month and then your budget can include the average – knowing that some months you’ll need less but that can be set aside for the months that you need more.
Finally, there are the items that are quite a bit harder to track but are still super essential to have in your budget – things like spending on groceries, household items, eating out, gift giving, and entertainment! Don’t give up because these take longer to hunt down. Here are some tips for tackling this large task:
Start with one area. Pick one item and hunt down all the money you’ve spent in that area over the last six months. For instance, clothing. Look back at your credit card statements and bank statements recording any purchases you’ve made at a clothing store for everyone in your family. Make a list of all the purchases for each month, then recording that number on your chart. Once you’ve filled in several months worth of purchases you can calculate your average.
Remember that if you only fill in a few months on your chart you want to divide by that number so you aren’t getting a skewed average. I recommend gathering at least six months worth of data so you can get a good idea of your spending over time.
Another option for getting a monthly average is to collect receipts. Make a file and for the next month toss your receipts for each category into an assigned envelope. Then at the end of the month you can quick add up all your receipts for each area to see what your family has spent. This would work great if you have multiple people who spend money on the same sort of expenses, like eating out or gas, so you are sure to catch all of them.
I’m going to stop here as the task of collecting your expense information is quite the process. I have been working on revamping our family budget (I do a full review of our expenses once a year as payments change and prices increase) so I’m in the thick of this process. I will leave you with this piece of advice until next time – sometimes you just have to guess and come back in a few months to see how it’s going. Over the last few months we have been doing a remodel so I have NO idea how much we have spent on home repairs as that expense is currently through the roof! For the sake of making our budget I am going to plug in a best guess number when I put my budget together and come back in a few months and make sure it’s working for us. Don’t get caught up in having to fill out every single line of the chart…do your best to get what info you can and come back next week to see how you take these numbers and turn it into a budget! Happy collecting.