Today is payday. This sounds exciting, but for us, not so much. Payday is also budget-and-pay-bills-day in the Gregory household. Needless to say, these are double-strong coffees and Ben and Jerry’s-for-breakfast days as well.
Today did actually turn out pretty well, despite one paycheck being almost $150 short of what we budgeted due to some unexpected days off last month. Ouch. So in honor of getting everything paid on time, my first article on money will be about our budget.
I developed our budgeting program over the last few years to fit our particular needs, but if you think it’d be helpful to you, you can download a copy here. It’s a conglomeration of tips and tricks I’ve picked up over time, including things I learned from Dave Ramsey’s course and financial wisdom from my mother, the world’s best accountant.
The program consists of four spreadsheets: a sticky sheet with an overview of our income, expenses, and debts; a flexible sheet for the current month, a flexible sheet for the upcoming month, and a play sheet for messing with the numbers without messing up the program.
The sticky sheet:
(click to enlarge)
- The blue section in the top left corner is our monthly income calculator.
- The orangy-pink section below that is where I keep track of our existing debts. This is the only thing on this page that gets updated regularly.
- The light yellow and blue section on the top right is the list of our monthly expenses. The top half is bills that are due between the 1st and 15th of each month, and the bottom section is the bills due between the 15th and 31st of the month. Items with an asterisk are to be withdrawn in cash on payday. This money goes into envelopes, and when it’s gone, it’s gone.
- The gray bit at the bottom is a summary to be sure all of the money is accounted for. The “difference” row should always equal $0. If there is anything left over in that row after creating the budget, it needs to be assimilated in to the expenses list.
The Current and Next Month sheets:
(click to enlarge)
These sheets come with helpful flags so I don’t forget to update something and then panic when the numbers don’t come out right.
Every payday, I update this one this way:
- First – this section only contains paychecks we have not received yet.
- Second – this is for the paychecks that we have received. (See how I did that?)
- Third – this is everything we have in my bank account, and everything we have in our wallets. We budget every dollar, remember, so there’s no such thing as “floating” money in our house.
- Fourth – here I update the bills that have already been paid and record payments as I schedule them. If a payment has been submitted, but it hasn’t cleared my bank yet, I leave the amount and put the word “scheduled” next to the expense. When the payment has cleared, the amount gets changed to $0. Every expense between today and the next paycheck gets paid, scheduled, withdrawn, or mailed during this step. (In this example, rent is paid, and I’ve used half of my grocery and gas money. Debts, phone, and utilities payments are scheduled, but haven’t cleared the bank yet.)
- Fifth – (yes, I forgot to add a tag for this one.) This is the gray summary section. “Total income + on hand” equals the total from the first step (expected income) plus the total from the third step (on hand). If I’ve updated my “on hand” balance and my expenses correctly, the “difference” row will be $0.
- Sixth – at the end of the month, I go back to the sticky sheet and update my debt totals.
(The play sheet looks just like this one.)
The budget rules:
- Every dollar is budgeted. No floating money allowed.
- “Spending” money (groceries, prescriptions, laundry, misc) is withdrawn in cash and kept in envelopes. When the envelope is empty, no more spending until the next month/paycheck/week when it gets refilled.
- Every bill for that pay period is paid on payday. No waiting until the bill is due, no procrastinating.
- Find a charity, a church, or a cause you believe in, and give. Budget it.
- When the budget is updated, bills are paid, and cash is withdrawn, stop thinking about money. No worrying about money between paydays.
And there you have it! What are your best practices for budgeting?