Confession: I’m a wee bit of a control freak. Which would explain why I’m the one responsible for the household bookkeeping. I have been using the same method to balance the budget since I was sixteen years old and moved in with Torri’s dad right before she was born. In fact, Torri’s dad was the one who taught me to budget, using a very scientific method that Jeff has since tried to upgrade, but time and time again I’ve had to tell him that fancy shmancy financial software programs would only complicate matters. I’ll stick with the easy way.
Easy according to this technically-challenged neanderthal, anyway.
My budget runs month to month. Right around the first of each month (or maybe the 30th of the previous month if I’m ahead of my game) I label a blank 4×6 card with the heading: July Bills. Or February, or April. You get the idea. And then I proceed to list our expenses for the month, always using the previous month’s card for a guideline. If I have the date available, I list the due date of the bill (expense) alongside the amount due. Once I’ve finished, my card looks something like this:
Once the expenses are listed, I flip the card over and list income. Like this:
As the month goes on and expenses are paid, I cross them out one by one. So, too, do I cross out the income as it comes in. I also have a handy dandy little white out tool that I use to change ongoing expenses. For instance, halfway through the month my grocery budget changes. I white out the old amount and mark in a new one to reflect how much money is left in the food budget. I also keep a running total of my Discover card balance on my bill sheet. About halfway through the month, the card would look like this:
The beauty of this method is that by adding the remaining income to my current checkbook balance, and then subtracting outstanding expenses, I can get a quick idea of how much money is left in the account to “play with,” which, unfortunately, is never enough.
One more tidbit: I also start each month with a blank card titled “Discover Card – July”. Every single time I use my credit card to pay for something, I write down the amount and the name of the retailer/establishment. I regularly go online and reconcile my little 4×6 card with the charges on my credit card account, placing a little check mark after each one is accounted for. Like this:
I actually run up quite a bill on my credit card each month, but I always know exactly (to the penny) how much money I owe. We charge everything: gas, groceries, you name it. EVERYTHING. At the end of the month I pay off the balance in full a couple of days before the due date. I cannot tell you the last time I paid one red cent in interest charges. Why do we charge everything? We earn between one and five percent cash back on all of our purchases. I let my cash back bonus accumulate throughout the whole year and then use it to buy Christmas presents. Last year, by December I had over $750 of “free money” to spend on Christmas.
Why am I telling you all of this?
Because I’m curious as to how you budget. Do you use financial software? Or do you take a more rudimentary approach like me? Do tell.
Oh, and, if you’re curious about our budget, check back tomorrow. I’m spilling the beans about where our money goes.