Budgeting for Better Life

I interrupt all the recipe sharing to post about budgeting. I have shared before how I keep our grocery budget on track, but grocery spending is only a small piece of the pie (and because of this spreadsheet I know our groceries are 12.27% of the pie). After some prompting from friends, I'm sharing how I budget for our family.

Let me begin by saying that budget isn't a bad word! Having a budget (or a spending plan) can actually be very liberating! When you have planned to spend and you have the money in hand, spending is so much more enjoyable. Budgeting doesn't mean you don't take vacations....it means you pay for vacations with cash. Budgeting doesn't mean that you can't go out for dinner, it just means you are a little more selective of when you go out. Our lives have absolutely changed for the better since we started budgeting. Who knew we could actually live a more comfortable and fulfilling lifestyle on one income? I am a firm believer than you can have it all, you just can't have it all at once

We are a single-income family. After my second maternity leave, I didn't return to work. Being a stay-at-home mom is something we always had in mind as part of my role in our family, but the timing wasn't carved in stone. We worked hard to pay off my student loan and our consumer debt before reducing our income. We also took a long hard look at what we were spending. For example, we drove an older vehicle at the time. It was paid for, but we weren't aware of how much we had been spending on maintenance & mileage. Once we added up 6 months of repairs, maintenance, and gas, we realized that we could be driving a new and more fuel-efficient vehicle for the same monthly costs! Our housing situation was similar. We lived in a home on the outskirts of the city, which meant our mileage was higher and our sense of community was lacking. The home itself also had significant costs in maintenance and repairs. We ended up building an efficient home in our ideal neighbourhood, close to friends, family, and Josh's workplace. Our daily life improved, and money was saved. We never would have made those big changes if we hadn't taken a good look at the numbers. 

The first page is the overall budget or master plan. 

This budget is based on 2 biweekly paycheques a month, even though there are 26 biweeklies in a year. We put those extra 2 payments directly into savings. It helps boost our savings, and it is easier to budget based on a regular income every month. Similarly, we don't include overtime, commissions, or incentives in our budget. Those incomes can also boost savings or be used for "extra" spending.

  • Step 1: Fill in your income. 
  • Step 2: Fill in your fixed expenses.   I t automatically will calculate what percentage of your income is being spent on each category.  
  • Step 3: Note the "difference" (under net income). That's how much money you have left after your fixed expenses to fill in your variable expenses. 
  • Step 4: To begin figuring where you want to set those variable budgets, you should go back through the past several months to figure out what you have been spending. If you don't have the receipts, check your credit card or banks statements and look at your transactions in different categories. Once you add up these totals, ask yourself how often you think you've used cash at those stores and add a guesstimate of that amount. Likely, this total will scare you. That's okay - things will get better! And if you didn't know where you were coming from, how could you look back pleased with how far you have come? 
  • Step 5: If you want to have a real TV/ Gail Vaz-Oxlade moment, put the amounts you have been spending into your budget sheet temporarily. Does it balance? Are you shocked by the percentage of your income that you spend in some categories?
  • Step 6:  As you look at the figures from past months, decide if you are comfortable putting those numbers in your budget or if you want to reduce some categories.  Again, as you fill in your budgeted amounts,    it will calculate what percentage of your income is being spent on each category.   Keep watching the "difference"...your budget has to balance!

Note: There is only so much you can do to cut back your fixed expenses, but I've been pleasantly surprised by how much we have been able to trim down our variable expenses just by putting it all on paper and being conscious of it.

The second page is where I track our variable spending. 

We bring home all of our receipts and every day or two I put the amounts in the tracker, so any given time we know month-to-date where we stand (groceries, entertainment, etc). This also allows us to know how much money we have left in categories that we budget for monthly, but only pay for a few times a year (hobbies/membership, Christmas, etc). For instance, when Josh goes to his basketball provincials, that expense will come out of hobbies/memberships. Most months we don't spend anything in that category, but the money sits in our account earmarked for those expenses when they come up, and that variable tracking sheet shows us how much we are supposed to be spending on it. If there are multiple receipts in a week to track in one category (and there always is with groceries), I just open a comment to list the totals, then add them up and put them in the cell.

The third page is net worth. 

This sheet is pretty self-explanatory. Fill in the amounts of what you own and what you owe. It is easy to feel like you are ahead of the game if you aren't living paycheque to paycheque or if you are looking at a pile of cash in the bank...but if you owe a lot of money, things aren't as great as they appear. Being realistic and looking at the cold hard facts is important if you want to live the good life and plan for your future.

This all may  sound more complicated than it really is. Don't get overwhelmed! Once your sheets are set up, if doesn't take more than a couple of minutes here and there to input expenses on the receipt tracker. All you have to do is begin, and take one little step at a time. I started doing this practice out of necessity, but it has become a way of life that I really enjoy. I hope you find the same thing. I welcome any of your questions or comments below or via Email. Bring it on! :)


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