Budget Smudget…

12 Mar

So for a girl who never balanced a checkbook, had overdraft fees up the ying yang in college, and really had no concept of savings is the one handling the finances in this household.  no seriously I am not joking. It all started when I was in charge of the wedding budget and makign sure we saved enough money to get to X dollar amount by May 30th.  I stalked an Excel spreadsheet all the time and really started to learn a little bit about saving a dollar.  So once our family merged into one I was left in charge of the finances for a couple reasons.  I love everything there is about online banking so I know our IDs and passwords and the husband really has no clue.  My husband works with money and accounts all day long and so for him it would just feel like an extension of his job rather than our personal finances.  So low and behold I was handed over the budget wand. YIKES!  Well we are almost an entire year into me handling the budget and I wanted to give some hints and tips for individuals wanting to start a budget or improve upon their already exsisting budget. 

If you are a couple or family before you start adding and subtracting numbers please make sure you have the talk about if everything will be joint accounts or seperate accounts.  How many accounts you want and what credit cards {if any} will be used for.  Some people use their credit cards for just emergencies and others pay all their bills with their credit card to collect points and then pay it all off at the end of the month. Be honest with the spending and what bills & debt you actually have because in the end it will come out somehow. It is good to have these discussions prior to starting a budget so that all parties are on the same page. 

Once my husband and I talked about these items and came to some decisions we were able to start a budget.  So for our family we decided on 1 checking account and 1 savings account with a bank.  We also have a special savings account, which I will talk about in a few.  Then we have our own personal credit cards that we use right now for emergencies and our shopping fund and we pay at the end of the month.  I have access to my husband’s credit card so that I can pay it off, but I never look at what was actually purchased in case he wants to suprise me with a gift {i.e. beautiful flowers I got recently}.

Okay so the discussions have been had about accounts and what accounts will be used for and now it is time to start a budget! Where do I even start?? I heard about this great tool called Mint and started to research it a bit.  So let me break it down for you a bit.  It is a FREE tool that you can hook up your bank accounts and start to track your spending and create a budget.  As you swipe or money is taken out of your debit or credit cards it puts the purchase in a category so you can see exactly how much you spend on groceries, gas, clothes shopping, resturants, loans, and any other items you want to figure out.  You create a budget by using Mint by stating how much you want to spend on each category (i.e. $50 gas, $100 groceries, $100 resturants etc).  As the money is taken out it tells you if you went over the budget allotment you have made, which means you either need to cut down on the spending or adjust your budget. Let me tell you for our family we never took out cash and we freely used our debit card to purchase items and to see how much we actually spent was completely eye opening! Wait money doesn’t grow on trees???? Who knew??

At the beginning  almost all of our budget categories kept going over {except for a set bills like student loan, insurance, car payment, etc} and we really had no concept of how much we spent on certain categories and so after about 3 months we sat down again to evaluate the data that Mint provided us on what we were spending and how we needed to stop spending in some areas and re-organize money for other areas.  Once we were able to evaluate what we actually spent we developed strategies to cut down some of the cost and for other categories we were happy in what we were spending and kept them the same.

Here are some of our strategies…

  • We take out a certain amount of cash for a bi-weekly allowance rather than using the debit card willy nilly throughout the week
  • We put a limit on our grocery bill because we were buying for certain recipes instead of using items we already had creating a HUGE unnecessary expense
  • We also put a limit on our resturant budget because this was one that was getting out of hand for us.  Some months were worse than others.  This way we have a budget for it and don’t need to feel guilty when we go out to eat.
  • We put a limit on what our monthly shopping/emergency would be on our credit cards and would not go over this certain number.
  • We found out we were spending most money on gas than anticipated because of traveling so we upped that budget ammount and took it from the money we were spending on extra groceries
  • We have a certain number we want in savings each month so we make sure that no matter what we buy that month we always have X dollars in the account at the end of the month to put into savings
  • We created goals for our 1 year saving goal and our 2 year saving goal to have something to work for–it was easy to budget and not go crazy because we had a wedding to pay for, but once that went away we had to create new goals which include a house and a new car.    
  • We also had smaller goals of putting extra money towards a car payment to pay off the car quicker, or loans quicker.  This has helped us keep on track because we have accomplished smaller goals along the 10 months we have been doing this. 
  • I round down our paychecks when making our monthly budget so that ever cent is not accounted for.  It puts less pressure on us at the moment because it is a surprise when a little more is in our account then expected. The extra is just a nice bonus to put in savings at the end of the month or to buy that DVD set we have wanted for months. 

Okay so now that we are almost a year into our budget I use the Mint program less because our budget has been pretty stable for the past few months.  Now I keep a notebook and each page has a different month on it.  The information that is on the sheet is our pay periods and how much we will get paid for each pay period, the date and amount of the bills that we owe. It has our allowance, grocery, gas, credit card payments, gifts needed, resturant. alcohol, etc.  I subtract the bills from the amount we will get within a month and I subtract all the categories for that month and then get a final result on savings.  We are not too restrictive on ourselves to the point we don’t feel like we are living our lives–but we also have cut down our monthly expenses in the hundreds of dollars with sticking with a budget.  

So now that we have savings at the end of the month what do we do with it so we don’t just spend it??

Well we do two things.  We have a savings account that is attached to our checking account and we only dip into this account for travel, gifts {especially christmas}, and our emergency fund if something breaks.  We have another account through ING direct which is an orange account and this gets a higher interest rate–but it takes a couple days for you to be able to withdraw from this account so you need to plan in advance to use this money.  This is helpful so that we have a futures savings for a house, car, and babies! At the moment we are doing 50% in our savings account and 50% in the ING account because we need to build both of them up.  Once we start to build upon our savings account a bit more we will change the percent to 20% savings account and 80% ING account so that we can start building our “nest egg.”   

The big thing for us was actually starting the dialogue of talking about money and being honest with ourselves for the spending habits we had prior to our relationship and even when we were living together, but had seperate accounts. For me I wouldn’t use the debit card all week yet when it came to the weekend I would spend a good amount of money.  My husband is the opposite and will spend a little every single day for odds and ends and by the end of the week it added up quickly.  Being able to strategize and help out the unneccessary spending {even if they fight you at the beginning} can really add up and help you reach your personal savings goal.  It never feels good to be living paycheck to paycheck and if something goes wrong one month it sets you back 6 months is always a fear.  Being prepared for the future is something that I have thought more and more as the year as progressed and these tools have really helped me and hope it helps you a bit. 

Any tips and tricks that help you?? Other strategies help you save??

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One Response to “Budget Smudget…”

Trackbacks/Pingbacks

  1. Budget: 1 year later « {W}renn's Nest - January 20, 2011

    […] my blog this year you know that budget has been on my mind throughout the entire year seen here, here, here, here, here. oh and […]

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