Wednesday, August 1, 2012

Budget Binder

Ok, Ok I know I promised you on Monday that I would tell you how I track and manage our budget yesterday, but yesterday was our anniversary, so I took a night off and had a delicious BBQ dinner with my husband and enjoyed our day :)


Back to budgeting...

I keep a running spreadsheet of all of our bills, due dates, balances, income and expenses. This is one of my ultimate lists! If I don't use this, I don't think about it and when I don't think about it, I don't stick to the budget, which is never good for anyone. Except the people I end up spending my money with...

You'll notice there are not very many numbers on any part of this spreadsheet. I really didn't want all of our skeletons information out there for everyone to see, so the numbers, bill names, categories, etc. are just examples. Feel free to download it and use/edit it if you'd like to. And as I said before, I am not an expert, nor should anything in this post be taken as expert advice.

The first tab on my excel sheet is a bills checklist. This helps me keep track of each bill that needs to be paid,  its due date, whether it's an auto-draft and whether or not it's been paid that month. Everything you wrote down Monday (both "bills" and "debt") need to be on this sheet.

The second tab is where I track our income. The top area is what we are estimated to receive in paychecks each month.

If you are a salary employee and make the same amount each month, you may not need or want the budgeted/actual/difference rows, so you can skip this step. For those of you, like me and my husband who get paid twice a month, every other week, weekly or some other combination, you'll need to estimate your monthly income.

Start with how much you take home in a pay period, multiply by the number of pay periods in a year and then divide by 12 (make sure you're not using your pre-tax income, or your budget will be off).

Example: If you take home $1,500 every 2 weeks, that equals out to 26 pay periods per year (52 weeks/2)
So, $1,500*26=$39,000 per year. Divide that by 12 and you have an estimated $3,250 per month in income. Got it? Fabulous.

Use this number to create your budget. Keep track of the amount you actually have coming in each month and the difference from your estimate. On months that you take home more than your estimated income, you may want to set some of that extra aside for an upcoming month where your actual income is slightly below your estimate.

If you have any extra income sources, track them in the second area. On the third area, I like to keep a total per month as well as the total amount I put into savings.

On the third tab, is where I track my budget and expenses. I break it down into categories and write down the limit of what I'd like to spend and then total what I actually spent that month so I can see the difference, and be mindful of areas I need to be careful with the next month. Remember: the total amount you list on this sheet should not exceed your estimated monthly income from the previous tab!

It may be a good idea to simply track your expenses for a couple of months to get an idea of what you actually spend. That way, you can have a realistic idea of what you spend so you can plan your budget accordingly. This will also give you an idea of where you can trim off some of the excess fat. Do you really need to spend $120 on coffee each month?

The last tab is where your debt calculations from Monday come into play.

Fill in all of the information you have written down, and list them in the order beginning with the highest interest rate. Each month, keep track of your current balance and how much your statement says to pay. Remember to pay at least that much, but try to keep it as high as the amount you calculated based on deadlines.

At the bottom of this sheet, I like to track the total amount of debt we have left and how much I'm actually paying off each month. 

This area is simultaneously the most disheartening and hopeful of the entire process. Disheartening because it's easy to get overwhelmed when you add it all up and actually write it down. It just becomes so real...
At the same time, you will be able to see your progress each month and know that you're actually getting somewhere.

I hope this helps clarify things for everyone!

What are some of your secret little budgeting weapons?  How do you organize it all to keep yourself sane when dealing with an oftentimes overwhelming part of life?

**Update: you can access the the full budget binder here.

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