Budgeting 101

I used to feel like the word “budget” was a dirty epithet in my house. I’m sure many of you are of the same sentiment but I’m here to change your mind and show you what a useful, easy and life-changing tool it really is. Making a budget will mean you are in control of your finances, not the other way around because there is nothing quite as bad as having your money rule your life.

To preface, this is a very simple approach to budgeting for those who are new to it and have not attempted a budget before. I am not any kind of financial expert/advisor, but I wanted to share the system I found because it has proved to be an extremely useful and, thankfully, simple way to keep track of my family’s finances. I’ve broken it down into 5 easy steps and I will be referencing the very helpful and fictitious Snarkle family. (It had to be Snarkle. Jones and Smith just seemed too dull, and also I’m just weird like that 😉 )

Step 1: Budget Binder

Now it doesn’t necessarily have to be a binder, but you will need to determine how you want to keep a record of your budget. I use this spreadsheet, Budget Sheets Blank, which I print off and put in a 3 ring binder. It is tailored to my needs, but the file isn’t locked? (I don’t know computer tech lingo) so you can modify the spreadsheet to meet your needs. You could just as easily buy a simple notebook and hand write everything. Play around with it and see what works best for you. There is no right or wrong way.

Step 2: Income

Determine what your income is per month. Easy as pie! Let’s say the Snarkles make $3000 a month.

Step 3: Bills

You will need to determine how much you spend per month on bills which generally include rent/mortgage, utilities, insurance, cable, car payments, etc. For example, the Snarkles have the following bills each month:

  • Rent
  • Electricity
  • Water/Sewer
  • Cable/Internet
  • Cell Phones
  • Car Payment
  • Car Insurance
  • Renters Insurance
  • Tithe

Now add all of your bills up. Since water and electricity bills vary, you will have an approximate amount. Determine the difference between your income and the monthly bills. This will be the amount you need for step 4. For example, the total of the Snarkle family’s bills is $1500. So, the difference is $1500.

Step 4: Budget Categories

The Snarkles have $1500 to divide between each of their budget categories, which consist of the following:

  • Groceries
  • Fun Money
  • Gas
  • Eat Out
  • Unexpected Expenses
  • Savings

Now I can’t really tell you how much you can or should budget for each category, as that will vary greatly with different families. However, there is one thing you can count on: There are always a lot of unexpected things you will end up having to pay for, so I always budget pretty high in this category. It never fails that you have an unplanned doctors visit, need new tires on the car, whatever! It just always seems to happen to me.

Let’s say the Snarkles divide their $1500 up like this:

  • Groceries: $300
  • Fun Money: $150
  • Gas: $200
  • Eat Out: $150
  • Unexpected Expenses: $350
  • Savings: $350

Step 5: Track Your Expenditures

After you have your money divided up into the appropriate categories, start keeping a log of what you spend it on to see how much you have spent in each category. So, let’s see what the Snarkles are up to this month! They just went grocery shopping and spent $230. So, there is still $70 leftover in the grocery category. Documenting what you spend will help keep you accountable, so that you aren’t as apt to overspend where it’s unnecessary.

If y’all are still with me after all this Snarkle family business, then you are just so very patient. I’m confident that if you get a budgeting system that works for you then you will begin to see many positive changes in your finances. The peace of mind that comes with being in control of your finances is well worth the work you will put into this. Have a blessed day!