This budget idea has successfully gotten us out of debt and stashed our savings account. The budget is set up for the month but is handled week by week. Doing it this way helps it not be burdensome, but FUN to save and become debt free.
The Main Goal
Before we jump into this budget sheet, you should note main goal of this budget idea.
The main goal is: Input must be larger than output.
This means that the money we earn each month must be more than the money we spend each month. Seems simple, yes? Although this has become the greatest challenge of our day.
With the invention of credit cards, coupled with spending economy that convinces us that we can have everything we want, this has resulted in the grand debt of our society.
In the old days, you would have to work for months to purchase the things you want. Today, we can just have with our credit cards. Face the consequences later. Doing this repeatedly causes havoc in our finances.
I knew we could not live this way, then entered this budget idea.
How the Budget Idea Looks and Works
Our budget sheet is drafted on Excel each month. The calendar month is at the top and each week is listed as its own column.
The first few rows is where we will record our income.
Our income is followed by the expenses, which is divided into two sections.
The first is our must spend list. This is the list of monthly expenses that are certain.
The next list is our variable expenses, which will change each month depending on how much we are willing to afford ourselves.
Expenses that are an absolute “Must”
The expenses that are an absolute must are listed first and totalled. These are not going to change and are the same each month.
Arranging them in this way shows me that we must earn at least “$X” that amount per month so that our output is not larger than our input.
Expenses that “Vary”
Next, I list the items that vary such as groceries and gas.
With this, I include our personal spending and miscellaneous items we may need to buy that month.
I mark these under the heading “MINUS”, because the understanding is that every dollar we spend here is money that we don’t save. Therefore, excess money spent on groceries is money not saved. Frivolous personal spending is money that is deducted from our savings.
Setting it up this way helps me to visualize the dollars in this section as being “taken” from our savings, which helps me to stay within the limits I set each month.
What I do each Week
Once the budget sheet is set up, I print a copy and keep it on our fridge. Each week, I sit with our bank statement and credit card bill to record every expense.
Then I tally it to track how well we are doing that week.
The benefit of doing it this way is that:
- Each week I get up close with every dollar we spend
- I can give a feedback to my husband where we are doing well and what we need to watch out for
- We can make decisions on bigger purchases
- We can limit spending right away where necessary
What if You are in Debt
When we were in debt, that second section of expenses had no personal spending. While this was a challenge for a few months, we knew that it would only be for a season. Furthermore, if you do not have “free money” because you are in debt, there is “no money” to be spent for personal spending. Don’t believe the lie that a credit card is free money.
Once you are out of debt, you can add back the personal spending portion with some limits to remain frugal.
What if you are self employed?
If you are self employed, this budget sheet could still work for you.
Since you aren’t certain of your income each month, the second section of expenses should remain minimal so that your output won’t ever be more than your input.
The income section will also look quite different as your recording won’t be regular each month. Once you have a pocket of money saved, you can add on personal spending each month that won’t be in excess of the money that is saved.
Money Saving Methods/Tips
My money saving tips are to stick to limits you set for yourself in the second section of expenses, and record everything expense.
The way I do this is to:
- Review the budget sheet before making any big purchases
- Tally the items in my grocery cart before getting to the checkout, so that I can remove items if necessary to stay in budget
- Stop spending immediately if we are outside of the bounds that would end with a month where our output is more than our input