Ahhh, the Budget. The most hated, yet most important aspect to a successful financial life. A good budget runs itself. If you don’t rush it’s creation and start slowly until it’s up and running, it won’t feel restrictive or overwhelming. A good budget is also like the constitution, it’s a growing, living document. If it doesn’t work for you, brainstorm and change it. A good budget is also a compromise between you and your partner. You should both have a say in what your financial priorities are and your budget should reflect that. Likewise, you’re both responsible when you break the budget.
If you’re interested in creating an easy to follow workable budget for your family, complete one of these steps every Monday evening until they are done. Once your budget is up and running, stick with Monday evenings being devoted to finances. Just set aside 45 minutes to keep everything up to date and log any discrepancies.
QUICK AND EASY STEPS TO CREATE AN EFFECTIVE BUDGET
Update: 2/19/15 I finally found an online system that also uses a calendar! It’s free and it works exactly like this written system I created but is easier to edit. You can check it out here at https://calendarbudget.com/home/
WEEK ONE:
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Grab a sheet of paper. Label the top of it “Financial Responsibilities at a Glance”. On the top of the paper, list the family income. If it’s not dependable income, such as overtime, don’t list it. Total the dependable family income.
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Now write the “1st of the month” on the next line and half way down the page write “15th of the month”. List every bill you have, no matter how small. Separate them by when they are due and list the name and amount due in either the pile for the 1st or the pile for the 15th. Total both lists.
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Now decide on a reasonable amount to set aside for groceries. If you’ve never tried to limit your grocery spending, aim high for now and reduce it later. The worst thing you can do is budget a hundred dollars a week, spend three hundred a week then give up. If you need a basic idea, we do 15 minute convenience meals at home and spend no more than 120.00 per week, including lunches for two adults (We could feed a small child on that same budget). You can follow our menu plans here. While I’m home now during maternity leave, I’m cooking from scratch and spending about $75.00 per week. (I use $5 Dinner Mom’s Cookbook which I rented from the library and just kept renewing through my maternity leave, you can buy your own copy here or just check it out of the library). Total your groceries and your bills and subtract that total from your total dependable income. Don’t panic if you don’t have a lot of extra money to work with- we’ll work on that next week. This week is just to write the numbers down and have an idea where we are now.
WEEK TWO:
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Drag out the paper from last week. Review it for the following:
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Review: Is there anything you can exchange? Really think outside the box here. A few ideas of what we did to exchange (over $23,000.00 worth of exchanges can be found here). Some quick examples:
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Switching our xbox live account to xbox live family plan with three extended family members and splitting the cost between us.
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Cancelling Rhapsody and allowing 12 iTunes songs to be purchased every month by us (6 for Jon, 6 for Rowy), we haven’t purchased a song in 3 months- so I’ve saved $36.00 right there.
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Cancelling cable and getting Hulu and Amazon prime saved us a ton! You can read the specifics here.
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Create a “Plan of Action” List (Can you tell how much I love lists?) Write down calls to make, things to research etc. regarding the above. Work on this list and see if there are exchanges you can make to reduce your bills.
WEEK THREE:
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Brainstorm: What other necessary purchases are there? List them down and a realistic frequency for which they need to be purchased. Here are few examples of our necessity list:
- Hair Cuts for Jon every 3 weeks – $20.00 (includes tip)
- Haircuts and Highlights for Rowy every 4 months – $170.00 (I actually went to red instead of blonde so I can do all over at home color and save about 300.00 per year, but Jon wanted me to go back to blonde).
- Oil changes every 3 months- $25.00
- Vehicle Inspections- $15.00 yearly (in VA)
- Vehicle Registration- about 60.00 annually
- Taxes- do you normally owe for income tax? Factor that in annually.
- County personal property tax- about $60.00 for us.
- Dr.’s appointments- we use flexible reimbursement so I don’t have to factor this into the budget.
- Gifts- Lists every person that you buy a birthday gift or Christmas for, list any upcoming weddings, baby showers etc. that you know you will be going to, list Valentines day and your Anniversary. Set a basic limit for each gift (if you plan ahead, you would be surprised how cheaply you can get excellent gifts).
- Retirement savings – If you don’t already do this, this will be your first goal after creating the budget. Ordinarily, it would be smartest to pay off all debt first before you start saving since your return on your investments in unlikely to be as high as interest on debt. However, if your having trouble keeping your finances straight, then forcing yourself to contribute to a Roth IRA (mine through USAA starts at $50.00 per month minimum contribution), forces you to save. In the event of a true emergency, you can take contributions out (but not profits), and if you take every penny you have and pay off debt, there is no guarantee that you wont just run up that debt again, undoing all of your hard work.
- Fuel – if you need something to base this on. I commuted an hour to work each day this summer and needed 70.00 per week for fuel. While I’ve been home the last 3 months, I’ve needed 70.00 per 3 weeks for fuel.
- A reasonable amount for fun and entertainment money. We do $20.00 per week per person, but we have to earn it by working out, tracking our food, not drinking soda, losing weight, and completing our chores. You can read about our healthy rewards system here. It also has a free downloadable chart in case you want to try this for yourself.
WEEK 4:
- Determine what your costs are to run your household. Do you ever think of the costs of all the little things needed to run your home? Shampoo, conditioner, body wash, hand soap, laundry detergent, deodorant, light bulbs, batteries, etc? Without being able to predict the cost of these things, a workable budget is a pipe dream. Head over here and follow the instructions to create a home stock room inventory and price list. Determine the dates that you will stock up (I go for every three months), write down the total cost and the dates of your stock up trips.
- These are the shopping lists, amount needed (to buy in bulk from walmart.com and shipped free to the house), and purchase dates for us in 2013:
- January 1st 2013 – Trip #1
- Diapers – Parent’s Choice – 1,120 diapers – $134.40
- Formula – (Just needed on this trip- He’ll be on solids by next trip) – $200.00
- Baby Wipes (Parents Choice) – 42.00
- Deodorant- Hers- x2 – 3.97
- Deodorant- His- x2- 3.97
- Toilet Paper – 16.97
- Tooth Paste – 2.25
- Shampoo- 5.00
- Conditioner- 5.00
- Feminine Care- 27.00
- Hand Soap Refills- 6.00
- Paper Towels (Using 1 roll per week, we use cloths for most things) – 14.00
- Air Filters (for the heating system) – 16.00
- Laundry Detergent- 24.00
- Kitty Litter- 50.00
- D Batteries – (Replace stock after Hurricane Sandy) – 13.00
- Cat Food- 16.00
- Sandwich bags- 8.00
- Gallon Freezer Bags- 8.00
- Foil- 10.00
- Wax Paper- 10.00
- PrinterInk- 11.00 (I getthemoff of Amazon, from refilled cartridges).
- Total Trip #1- $617.00
- May 1st 2013 – Trip #2
- Same as Trip #1,butdelete formula and D batteries.
- Total Trip #2 – 404.00
- Same as Trip #1,butdelete formula and D batteries.
- September 1st 2013- Trip #3 and Yearly Stock Up
- Same as Trip #2, but add the following:
- Dish Detergent – 10.59
- Kitchen Trash Bags- 25.00
- Small Trash Bags- 36.00
- Claritan- 57.60
- Shaving Cream- 6.00
- RazorCartridges- 18.96
- Total Trip #3 – 558.96
- In case you were wondering- that’s 1,605.96 per year to run the house, or 133.00 per month, which boils down to 33.00 per week.
- By doing this step, you take away any variables from your budget, enabling you to stay on track. You can’t forget to add cat food into your budget. Everything is automated.
WEEK FIVE:
- Go out and buy a 12 month calendar with giant writing blocks. Choose an 8×10 bound calendar with 1/3 of the page used per day. Here is an example:
- Do the following in pencil- On the 1st day of each month- list your bills (not your necessities) and the amount due.
WEEK SIX:
- Go through your list of necessities and start adding those amounts in on either the 1st or the 15th preceding the date the money is needed. For gifts, leave at least a month before the event. For instance, my dad’s birthday is on Halloween (October 31st for my foreign readers), so I’m going to list $15.00 on September 1st to buy Dad’s birthday present.
- Now add in your salary and earnings. For us, we have stable earnings (each of our salaries) and inconsistent earnings (the blog for me, overtime for Jon. Technically, I could work overtime as well, but I really, really hate overtime.) Go through all of your 1st’s and 15th’s and add in your paychecks. When you work overtime and you know it’s coming up, add that in as well. Subtract the amounts of each bill/necessity from the income.
- If you don’t have anything left, go back to you lists of bills and necessities and figure out how you can reduce your bills for a while. Cancelling cable is the most bang for your buck, plus it forces you to spend time together and (gasp!) talk to each other! If you need to make up money, selling things on ebay is a great option. Don’t go nuts- I would sort through your clothing and grab all of the jeans that don’t fit you, sell them in a lot. Lots of clothing in the same size sell particularly well. Make the listing end on Sunday evening at about 10pm (statistically the most active time for sales).
WEEK SEVEN:
- The leftover amount each date is your extra income. Have you and your family (heck, include the kids too) make a list of future goals that cost money. Vacations to Disney World, buying a larger house, opening a brewery, staying home to be with the kids full time, a new car, living debt free etc. Have everyone assign a cost value to them. Now think of the smaller goals- think of things like sending out Christmas cards (that costs money right? most likely it wasn’t in your necessity list), adding a few throw pillows to your living room, getting a new tool for your workshop, visiting your family in Kentucky, etc. Assign a reasonable value to those things. As a family, pick your top 3 priorities. List them in order, 1 being the most important, 3 being the least. Do you see a pattern? Are the same things in the top three? Together determine the families top 3 goals and the order in which they are achieved. For instance, if your goal is to purchase a house, you may want the Disney vacation first, since it will take less time to achieve that goal. Also consider alternatives- maybe you would rather vacation somewhere less expensive so you can get the house quicker.
- Next determine how strict on the budget you want to be as a family (we choose very strict, with the occasional late night pizza meltdowns). Work together to remind each other of your goals and how to stay on track. Seek other sources of income to create income for additional things that you may want- a blog, an etsy shop, reselling items on ebay for a profit, decluttering your house and selling items no longer wanted on ebay.
- At the end of each date (the 1st and the 15th), write the first initial for your goal: like H for house, then write the leftover amount. That’s the amount in your “bank” for that goal. If you want to work on a few goals at a time, separate them out and distribute the amount as you please.
- MAKE ABSOLUTELY SURE that you keep track of your actual bank account as well as your bill calendar. If your hubby forgets that he bought something, your bank account will reflect differently than your calendar. Every Monday, review your account online and note any discrepancies from the budget, adjust that date accordingly.
WEEK EIGHT:
- Follow these steps to set up a financial file cabinet.
WEEK NINE:
- On the notes page of your calendar, set up a quick account info reference sheet. Just include companies and contact info (most companies can verify you without an account number, such as with your SSN or DOB). You don’t want anything too risky logged in here since you want to be comfortable taking it out of the house. I use my calendar for bills, scheduling, everything.
- Consider using a thermometer. You know, those crudely drawn thermometers that people use for fundraising etc to watch their goal being met. Anything that helps you stay on track.
We should be friends!
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Cece says
Thank you so much! This has simplified my life by a million!!!!
The Busy Budgeter says
Glad to hear it Cece!
Christine says
Great tips and I’m glad to hear the responsibility that goes with them. So many people nowadays just seem to have so many excuses how they can’t do anything about anything. I will say your taxes are low. Amazing. I love in a really poor town in Northwen Mississippi and pay $1,100 in taxes on my tiny house and $175 for my car registration.
The Busy Budgeter says
Woah Christine! That’s a high tax bill! Our Property taxes are included in our mortgage payments, and thankfully we drive a clunker. There’s also been a personal property relief act for the last several years that helped reduce that cost. I came from NY and hadn’t had to pay a personal property tax on my car before so that was an unpleasant surprise!
The Busy Budgeter says
Happy to help Thomas!
The Busy Budgeter says
Aww! Thanks! That’s one of the best compliments I’ve ever had!
The Busy Budgeter says
Fixed Sheri! Sorry for the inconvenience. We moved everything over from a free blogger blog, it took forever to go back and individually fix all of the links!
The Busy Budgeter says
I have it pretty easy since most of the people that I get gifts for aren’t very materialistic. We even do a $10 Christmas:)
I tend to think outside the box and think of what someone really needs or wouldn’t snow about or think about.
My favorite gifts this year were Magnetic spice tins with shaker tops ($1 from the Christmas Tree Shops), that I filled with bulk spices (I freezer cook so I always have huge jars of spices) for my dad to stick on his RV fridge. I also got a copy of the book “Vampire Academy” signed by the author for $10 from the authors website for my sister who is a die hard Vampire Academy fan.
I’ve found gifts everywhere from thrift stores to groupon, to commercial stores.
The Busy Budgeter says
Glad you liked it Kim!
Bethany says
I cant express how helpful this has been for me! I am a terrible at creating budgets and most of the tutorials I find on line are so overwhelming. This is really helping me get my money on point! Thank you so much for your great posts!
The Busy Budgeter says
Bethany, thank you so much! I love comments like that! I printed it out and taped it onto my office desk. When I’m ready to throw my blogging computer out the window, comments like this save me. 🙂
kassandra says
For the diapers you can ask a friend/family member that has a costco or any other bulk place to lend you the card or go with you to get a few of the items that can be purchased in bulk, it adds up, too. I bought the bulk pack of Huggies Natural Care wipes (1160 wipes, a tub, and a clutch & clean) (all the other ones give her a rash) back in mid-February it’s a total of 5 packs of wipes and I still have 3.5 packs left (including those super messy huge poops that use 5-10 wipes at least once every 2 weeks) the best part? The whole box was only 24.99! So yeah, that’s one big savings from what I saw in your budget. And I’m sure things like toilet paper, paper towels, freezer bags, cleaning rags, garbage bags, purchased in bulk would add up immensely. Pretty much everything that’s non-perishable or doesn’t expire for years ( like the Claritin as well) can be also purchased in bulk for like the year and sandwich bags (I’m assuming for personal use) $8 3 or 4 times a year? You can just get a fabric re-usable one for less than $8 and they will more than be their money’s worth (also helps environment, bonus!) So yeah there are many ways to even trim that budget cost down. E-mail if you think we can brainstorm any further costs.
And a little thing my grandmother taught me a few months ago– the dollar store is amazing. They have condiments, foods (a full loaf of italian bread or 10 8″ burrito tortillas for $1? Hell yes!) so don’t knock off the dollar store either if you have one in reach. Compare prices, too sometimes walmarts rollback can even be beaten. And do the math per volume. I went to pathmark one time last minute to get some refreshments and they thought they were able to trick me. They had the 2 liter bottles for $1.99 but the 1.5 liter bottles for $.99, you bet I got 2 1.5 liters for a penny less than one 2 liter! Always look for the unit price, price per ounce, etc.
a few days after having my baby (I nurse) I bought lansinoh covers (to prevent leaking marks on clothes) the box of 100 was for $8 and some change so I bought 2 boxes, now I can’t find them anywhere for less than $12+ each! Happy can’t even begin to describe it.
The Busy Budgeter says
This whole comment makes me so happy. I feel like we must be related. Yes to everything! Every once in a while, I wonder if I’m the only one crazy enough to get excited about shaving a few dollars off our spending. Clearly, We’re meant to be friends. 🙂
Allyssa Cross says
I was so excited reading this and I am definitely excited to start having extra money so I can start paying off my debt. This helped me tremendously and seeing as I’m only 24 this is going to save the rest of my life
The Busy Budgeter says
There is no better time to start than the present Allyssa! Trust me, we started much later than we should have!
Janet Banks says
Loving the budget calendar
The Busy Budgeter says
Me too! Thanks janet!
A. Johnson says
Thank you for the helpful information. I am very excited to give this a try. I have tried budgeting for years but never followed through. I have a question though. My paycheck come in every 2 weeks and my husbands at the end of the month. Instead of listing on the 1st and 15th, should i list on the dates we get paid? Again, bery helpful! Thank you!
Anna Richards says
Dear BusyBudgeter,
I have been reading your blog most of the day! Thank you so much! I feel like I should try this calendar budget myself, but need your advice on a few things:
Anna Richards says
Guess I need more space. Just posted post before this one:
1) wondering if I should get the “at a glance” you mentioned. Do you use yours for all your calendaring? I have planner, but smaller.
2) I just read your 1st week step. I realize I’m already thinking ahead, but need something to work for me. I have the Dave Ramsy CD’s, but I get so overwhelmed trying to start, that I don’t start. Does this make sense?