One of the most requested post topics I have gotten is how we budget. I have spent a lot of time putting together a financial system that works for us and I’m going to share the basics of how I structure it in case it can help you with yours!
1. We have two checking accounts.
Savings is a totally different topic but we have two checking accounts. One is where our pay checks go and what we spend out of and the other is our bill pay checking. I know exactly how much of each of our paychecks needs to go in that account on every payday to make sure all bills are covered. I love knowing that that money is automatically put away and we don’t touch it. Doing this allows us to know that our bills will always be covered without worry and gives a clear visual of what’s left to spend/save after bills are taken care of.
2. We budget.
We have a monthly budget that I also break down on a weekly basis depending on who gets paid that week. I cannot overstate the importance of writing down your expenses and income and making sure that you’re handling those correctly. I personally like this budget sheet. I like how easy it is to download a new one, it has most of our expenses already listed and I like the percentage suggestions. I edit it a little and it works for us! Obviously things happen so I am constantly updating and tweaking our budget to make sure it works for us.
3. We use cash.
Since I work in the financial world we tried the whole envelope system for a few months for two reasons. One, I wanted to see if it was worth all the hype. Two, because I didn’t want clients asking me my opinion on the program and not having an educated one. It just didn’t work for us. It was too complicated to keep up with and just didn’t work well with our lifestyle. It can be so great for a lot of people, it just wasn’t for us! We did notice that we tended to spend less on certain categories using this system though. Eating out and the grocery are two that we noticed a big change with so we decided to keep those. Every week when we get paid, I get the cash we budgeted for eating out and going to the grocery that week. This is where we were spending the most money without realizing it and this has helped us so much!
Meal planning at the beginning of the week has greatly helped with this too! Using some of the ingredients we already have in stock and making meals out of those and having a plan to eliminate waste has really helped our grocery budget.
4. We say no.
There are a lot of things we want to go do or buy but we say no. Sometimes it’s really hard but we know that what we’re saving up for is the most important so that keeps us focused. I gave up the dollar bin (that pesky part of Target is a money sucker and let’s be honest it may be cute but it’s 99.9% crap we don’t need) and we gave up a lot of other discretionary spending we were doing. We know that one day when we’ve built the businesses we’ve dreamed of and have our dream property/home it will be worth it. This doesn’t mean we don’t spend any money! We each get a certain amount of spending money every month and when we need something or there is something we really want we figure out the budget to make it work. We also sell any excess we don’t need. Ebay and consignment stores are a great way to get rid of items you’re no longer using while also making a little extra cash to help pad your budget.
5. Emergency Savings
Savings is so important!! A lot of people save for vacations, holidays, etc but I am talking about a different kind of savings. The kind that covers if your refrigerator goes out, you need new tires or your cell phone stops working. You need money put away to cover those things. When we first overhauled our budget after the wedding craziness settled down and we had a good idea of all of our monthly expenses, one of the first things we did was set aside an emergency fund of $1,000. We have had to dip into it for things like a gas leak, tires, etc and as soon as we do we work on building it right back up.
In addition to that, we are working on building up 3-6 months of living expenses. This world is crazy and although we both have good jobs and our side business, those can all go away and unfortunately mortgage, student loan and utilities payments do not. It’s important to have enough saved up to cover expenses if something bad happens. This is really hard but we’re slowly working on it so that we’ll have that security blanket.
6. Be on the same page.
I hear people say all the time that they fight with their spouses about money or that money is one of the biggest conflicts in a marriage. Jared and I always laugh when we hear that because that is the one thing we NEVER fight about. We have always been on the same page. We put together a budget and planned our finances before we ever got married. We have continued to have open communication on that topic as well. I think it helps that we’re both very business oriented and have the same goals for our family. This allows us to stay focused on those and encourage the other when one of us gets frustrated. We may disagree on when to buy a piece of equipment or what we’re going to eat that week (seriously does everyone else have this much trouble planning meals that both people are craving?!) but we don’t disagree from the financial perspective and I’m so thankful for that. Not arguing about money keeps a major source of stress out of our marriage.
I hope those tips give you all some ideas! Our system is not complicated, it’s just what works for us. We started with one budget and system and then have spent two years tweaking it to get it to work for us. It’s a constantly evolving system to fit our needs at that time and that’s what your budget needs to be too! We are not perfect. There are times we spend too much and regret it but we’re moving forward in our financial plan and that’s how we intend to keep it!
If you have any favorite budgeting tips or ways to save, be sure to leave them in the comments below. We can all learn from each other!