Today I’m going to chat a little bit about budgeting and how we started this Every Dollar sort of Dave Ramsey approach to budgeting. We’re in week 1 at this point, so I can’t really tell you if this is a fabulous idea or one that will cause us to go what the hell were we thinking?!
Time will tell 😉
I mean having a budget makes sense. A budget can bring you back into control of your finances, rather than being controlled by them!
I used to use an Excel spreadsheet to budget my income and expenses. I was able to save quite a bit of money using this spreadsheet method.
The issue is that I was a single mom with a fluctuating income but it was just me. I had a pretty solid understanding of my income and how it came in. Back then? I really had a stable day to day expectation of income or at least weekly and I didn’t have to worry about anyone else.
Now, I wasn’t always a single mom. I also was in a relationship a couple of times where I had to try to budget with someone and it never lasted, we just weren’t ever 100% on the same page.
Today? My income is steadily the same each month but how it arrives in the bank account is a different story. I could make $500 this week, $100 next week, and then a whopping $998 another week, then in week 4 make $0 that last week of the month. It’s extremely difficult to plan a budget.
Also, I’m not a single mom. I’m reunited with my younger two boys’ Dad. So I have to practice teamwork with budgeting so to speak, and that’s difficult for some. Thankfully, we both have very similar mindsets and spending patterns which makes it easier!
Hub’s income is steady. He is paid weekly by an employer and you can pretty much predict that income week to week for budgeting purposes.
How boring, right?! 😉
Sitting down with my hubs over the weekend to get on some sort of positive direction with our finances to know what we can spend for Christmas and what we can save towards our springtime goals was rather interesting.
We decided to go with something like Dave Ramsey’s approach to budgeting. This is where you allocate every single dollar that flows into the home towards something. You could find you have $5 left at the end of the month, and that needs to have a “home”.
The “home” for those funds could be a savings account, but it needs to be allocated for some specific place.
Let me just tell you what, trying to allocate every last dollar down to the penny is very difficult for this chick to get used to.
I’m not a big money spender. I rarely spend money on anything outside of our needs, but if I have $70 and there was this thing I needed or the kids needed, I’d just buy it.
No more of that!
We have to let the money sit and each week the funds we earn are allocated to something specific. If I need or want something, if hubs needs or wants something, we both must communicate and build it into the budget.
Oh, this is just going to be so much fun!
So anyway, as we wrap up our first week doing this whole weird Every Dollar method by Dave Ramsey, I’m sure to update y’all in the future with how this has successfully helped us achieve our goals, or perhaps I picked up drinking more alcohol.
It could go either way. Ha!
Now that we’ve sat down and done all the dirty work, I wanted to share some tips to help you start an Every Dollar Counts sort of budget system with your lovely partner in life.
Figure out Income
Obviously, since I have multiple streams of income, I had to sit down to figure out my average monthly income. This is after all the fees associated with WaveApps, Square, and Paypal.
After I determined my monthly income, well, I realized that I didn’t take into consideration the payments to independent contractors, and some business expenses. So that’s something that had to get revised. Meanwhile, hubs has weekly pay, so we took his 40-hour pay for our budget.
Figure Out Expenses
This part was pretty simple for us since we have our bills in a shared calendar so we always know what expenses are coming up. Of course, during the process of figuring out expenses, we realized that some items aren’t on the calendar!
We found that the monthly trash removal and one of our streaming services weren’t on the bill calendar. Oops!
Evaluate The Money
Now that you know your income and monthly bills, do a quick estimate of what you might have for funds after everything is paid for. I’ve lived that life where this resulted in a negative number, so we’ll chat about that another time.
Our expenses subtracted from income resulted in a positive number. This means we have the funds to pay bills and try to allocate every dollar for a specific purpose.
Make that Committment
The final simple step is to make that commitment to allocate every dollar to a specific area in expenses and savings. This was hard for me because I don’t like allocating every single dollar, I’m a mom and have seen that surprises come up. It makes me a little anxious, to be honest 😉
BUT this is the whole point of allocating every dollar to a specific place. The positive number that we had when we subtracted expenses from income? We’ll use that for Christmas presents, savings, and similar expenses so that it’s all “used” for something.
In conclusion, having a budget is an important part of being financially savvy. You don’t have to make loads of cash to have a budget! The key is to budget what you DO have. This will help transform the way you feel about money.
After a bit of time, perhaps 6 months or longer, you’ll start to feel more confident saying NO to extra spending as you watch your savings account slowly build up over time.