Step 2 - Starting to Budget

Step 2

Setting up AND following a budget

Budgets? We ain't got no budgets. We don't need no stinking budgets! 

It is tough enough juggling (its akin to cat-juggling) and paying for a large family without the added stress of having a financial mess that rivals the current mess that is The Kardashian’s. When dealing the extra challenges of raising a large family (all worth it of course, wink wink), do you really want to be in financial distress? I didn’t think so.

No a budget isn’t a magic wand that makes everything alright. But it will help give you some financial peace of mind. And any task that can reduce stress is a thing worth doing (smoking weed being an exception).

I’ve seen budgets with anywhere from 3 (needs, savings, wants) up to 70 categories, yes 70. My current budget spreadsheet as 22 categories and next to each category is a column labeled “budgeted” and one label “actual”. There is a 3^rd column labeled remaining that tells be how much is left in each category or how much I have gone over. Plus the columns are totaled at the bottom for the big picture view. I also have a table to track my income. And then there are columns and rows were I list every purchase made it each month as they happen.

It may seem like a lot of work. But once you have the initial setup done it’s not hard to use at all. You do have to enter everything you spend money on but I enjoy doing it. And it gives you a great handle on your finances. And at the end of each month you know exactly how you did. You are either in the red, black or even-Steven.

If this seems overwhelming than maybe a simple 3-category budget might be better at first. You first list all your needs and how much they will cost you. Mortgage, food, utilities, charity, insurance etc…and no, going to Five Guys for a burger and fries is not a need (although it is pretty close). Neither, sadly, is shopping at Victoria Secrets a necessity. Second, you write down the amount you want to use for savings and paying down debt. Then whatever money is leftover goes in the “wants or blow” category. Just remember once you have spent everything in the “wants” category, you are done for the month. So plan well. This is an easy way to get started on budgeting until you feel that you are able to switchover to a more detailed budget. Some people do just fine on the simple budget but I find that I do better on the more detailed one.

Just because you have money left in a category doesn’t mean you can spend it. Let’s say it is the last day of the month and you have $10 left in your food category. Should you rush out and buy a box of Ritz crackers, a can of Cheese Whiz and a bottle of Mad Dog 20-20? Or should you add that $20 to your retirement account or apply it to a credit card balance? 

Here is a mocked-up sample of the spreadsheet I use.