Click on the link above and then read along to learn how Sam created her budget: I set up my budget for two week periods (aka when I get paid). It makes it easier to see what expenses you have per pay period rather than looking at a whole month all together. It doesn’t really matter how you order your expenses, as long as all of your living expenses, spending, and groceries are on there. I try to cluster “debt” in one area so that I can see how much I’m spending on debt per month (a HUGE motivator). Things like rent/mortgage, rent/homeowners insurance, utilities, cable, internet, gas (for car), car insurance, groceries, spending money, and debt (student loans, car payment, etc) are all budgeted every month. These are pretty easy items to budget since they typically don’t change too much.
Extras: I originally didn’t include “extras” in my budget because nothing was supposed to be extra. At our age, we’re going to bridal showers, baby showers, weddings out of town, etc. You might have to spend your entire 2-week allowance on a gift for someone else. I felt like that wasn’t realistic so I set up “extras”. Don’t misunderstand these “extras” as cheating on my budget. Remember when I said that sometimes I only budget $100 instead of $150 per two weeks. These extras come up from my saved “spending” pile. As you can see, it takes some planning ahead in order to make these “extras” work. If it’s January and you know you have 5 weddings and bridal showers to go to in the summer, start saving now! Then you will have the money when those events come around. You’ll be amazed at how much you DON’T spend when you’re paying with your pre-determined amount of cash. Stay away from the ATM after you’ve debited your original spending!!!!
It is actually a freeing feeling when you pay for something and not worrying if you have enough money in your account or waking up the next morning and seeing how much you spent. You’ll be a calmer, happier, less in-debt person.
Click on the link above and then read along to learn how Brittany created her budget: Through trial and error I have found that I am most successful in executing my pre-planned budget when I keep things simple, and I have devised a simple categorical method to budget my bi-weekly paychecks. Each budget sheet contains two columns: One is for the first half of the month and one is for the second. No, your eyes aren’t playing tricks on you; my categories are color coded. Don’t judge me—not only is it cute, but it also really helps my organizational process…really.
Purple: This is where I put all of the required payments that automatically come out of my paycheck each month. This category is my biggest category and changes very little from month to month. You might have noticed that I have a “Capital One Payment”. Yes, I do have a credit card, but I pay off EVERY SINGLE PENNY owed so that I am a clean slate at the beginning of every billing period. I never use a credit card and cross my fingers, hoping that I will have money to “pay it back” soon. I typically use my credit card for big online purchases (i.e., moving truck, plane tickets) so that I can get cash back, and then I pay it off completely at the end of the month.
Green: The items in the green category are all paid for with pre-determined amounts of cash. When this document was first created I spent a lot of my work day traveling in my car and took all my mileage for granted. When I stopped to pay attention to how much money I was spending on gas, you can bet my off duty cruising was curbed. Now that I have determined an acceptable standard amount of money for gas and established more control over my driving habits (that seems kind of embarrassing, but at least I’m being honest), I trust myself to use my debit card for filling up my tank. “Cash Money!!” has exclamation points because that is my FUN FUND and it is exciting. This is the cash I allot myself to live it up two weeks a time . Sometimes I end up with a lot of cash left over—maybe my couch was really comfy that week or my friends were out of town over the weekend, but sometimes it feels like extra days are snuck into my calendar. It is during these long weeks that I either become a financial whiz or accept the fact that I am on a budget, and maybe I don’t need to go to out every night on the weekend. I would be willing to bet that studies could show a correlation between saving money and getting enough sleep.
I also use the cash system for groceries. This is where I saw a huge change in my bank account initially. The grocery store can be a sneaky money vacuum. Give yourself a set monthly budget for groceries—and stick to it! Your mind will be blown, and if you are like me, your grocery store of choice is going to take a major hit in their ice cream sales.
Pink: My pink category is similar to Sam’s “Extras”. While purple and green are nearly always within a $100.00 range on a month-to-month basis, the pink category is where things can get a little crazy if you let them. These are purchases that I usually know are going to be happening before my 2-week budgeting period begins—gifts, hair appointments, doctor appointments, airfare, vacation money, etc.—and the amount I need goes up and down each month. It is very important to use this category as needed. If I can use less than $50 in this entire category, I get to celebrate putting a big, fat chunk of money somewhere else! This is the money that gets put into the emergency fund, towards debt, or into a savings fund for a month that will require more money because of an awesome vacation or a major grown-up expense, like new tires for your car. Responsibly managing the pink zone greatly reduces your chances of being caught in a very unfortunate and entirely avoidable financial crisis.
Purple + Green + Pink = Total Expenses
Income – Total Expenses = Total $ Left Over
Since I’ve started tracking my expenses using a written budget plan, I have saved money from each and every paycheck. I’ve learned that when I pay attention to where my money goes, a lot more of it stays in my pocket.