Whenever I mention our budget on Twitter or Facebook, I get requests to hear more about how we handle budgeting. I take the requests to heart because I love giving you all what you want, but I also tuck them away for a later date. A later date. A later date. I kept putting off a budget post because a) I am no expert and b) it’s different for FFF stuff and while I find it interesting, I don’t want the rest of you running away thinking “what the heck happened to our fun-loving Tina??” You running away would make me 🙁 . Please don’t make me sad. Instead, join me as we talk moolah and share your own ideas in the comments! Don’t make me bribe you with my huge stash of cash fifteen dollars.
Reader’s Request: Budgeting in the FFF Household
Until recently, Peter and I never really tracked our expenditures and would get things we wanted when we felt like it. We shopped for deals and weren’t frivolous by any means, which worked well in our minds. Then, in May, we attended a “financial learning experience” with motivational speaker Joe Sangl at our church. We felt like we had been hit upside the head with a 2x4 and decided to get serious about setting up and living off a budget. Here’s how we did it.
Get A Trusty Spreadsheet: Joe Sangl mentioned having pre-prepared budgeting spreadsheets downloadable for free on his site. Free? I don’t have to make it from scratch? Yes please! We nabbed one, saved it as a Google doc (to access anywhere and be able to easily share the document), and sat down with our calculators together.
Figure Out Monthly Bring-Home Income and “Spend It”: We determined how much income Peter brings home every month and added it to the spreadsheet. Then we started filling in the various columns for different spending areas and spent our money how we normally would in the spreadsheet. Like virtual shopping so to speak. Only…ouch. We blew through our monthly income pretty fast. Time to figure out where to put our dough.
Begin With the Essentials: We determined the biggies that had to stay and the regular bills first. For an example, here are some of those essential spending areas for us:
- 10% tithe to the church
- mortgage payment
- car payment (last one paid today in fact! so extra money to savings now!)
- bills (electric, water, car insurance, etc) – Any without a set monthly amount or bills paid yearly (like car insurance), we estimated an average monthly expense to put in the budget.
- goal amount for general savings each month
- amount for random things that come up like purchasing gifts
- any specific items needing to save for – We are making a point to save money for an anniversary vacation for next year.
Take a Hard Look at Other Spending: Now it was time to cut where we could. Entertainment budgets, grocery budgets, baby budgets, etc. We used to enjoy going out for a date night once a week…we now take a monthly date night out and eat in a lot more to bring our entertainment budget down significantly. We set a strict, but realistic, budget of $85/week for groceries that I can meet shopping deals, using some coupons, and learning to say no to things I don’t really need (like two packs of goat cheese every week). It was hard, but we realized there are plenty of places to make sacrifices to make a budget work. And sometimes you have to do that. Plain and simply.
Create A Spending Spreadsheet: Along with our overall master budget spreadsheet, we have separate “spending tabs” for each month. These tabs have columns for each section of our budget where we can easily put in our expenditures and have the spreadsheet add it all up for us. It helps us quickly see where we’re at with total spending over the month…because a few dollars here and there adds up FAST and can quickly send you over budget if you don’t keep tabs on it.
We update our spending spreadsheets every day – that bill that posted or that stop at the gas station. In fact, I have a link to our Google Doc in my bookmarks bar so I never forget to update it regularly!
It takes only a few minutes and helps keep us aware of where our money goes and allows us to remain mindful of our status in certain areas. There are also sites like Yodlee and Mint that will sort it all out for you, but we personally prefer doing it ourselves to increase the awareness of our spending.
At the End of the Month: We sit down at the end of the month to see how things went. We determine which parts of our budget roll over to save for other months – for example, electric bills that fluctuate or bills we budgeted for monthly but only have to pay yearly (car insurance). Other areas, such as grocery/entertainment/extra spending/etc, we add up the difference. If under budget, we take the excess and put it aside as “fun money”, to pay down more of our mortgage, add to our vacation fund, etc. If over budget, we would have to take it out of our personal spending budgets that each of us have – Peter from his side projects and myself from my blog money. Then, we make adjustments for the upcoming month and off we go again. Is your head spinning yet?!
We will eventually budget to save for new countertops. The teal tile makes me barf.
It’s a huge learning process, but I can already see the benefits! I hope this didn’t bore you to tears and helps in some way if you were thinking about budgeting. I cannot recommend Joe Sangl’s site and information enough if you want a deeper overview. It really helped us.
- Do you use a budget?
- What would be the hardest area for you to cut spending?
