The Family Budget – How to Be Prepapred

It’s the end of the month and I am working on next month’s family budget. I prefer to think if of it as more of a spending “plan” than a budget, but that’s just a psychological trick I like to play on myself.

For those of you who aren’t familiar with budgets and spending plans they’re basically just a map of where I intend for the family income to go in a specific time-frame. Without a plan we’d never get our bills paid on time and we’d never have money left over for things like filling up the oil tank or our car insurance premiums. We’d probably spend it on things that we don’t really need and we definitely wouldn’t remember where most of it went!

The first thing I do is pull out the calendar and figure out who gets paid when. The hubster is on salary, which is nice because it’s dependable. I, on the other hand, am on commission, for every single one of my jobs, lol. It’s important that I track both my income and my expenses for tax purposes so it’s pretty easy for me to figure out whether or not I am expecting any income for the next month. I can’t go much further than that because it’s so unpredictable but I always write up a “tentative” plan for the following month.

For instance; I just finished our family budget for April, that is pretty much set in stone, there’s a little flexibility for financial surprises but for the most part I know what I’m paying when and where the money is coming from. I also wrote a tentative family budget for May. This will change throughout the course of April depending on what work I complete and how much money I am able bill out. By the last week of April I should have a pretty firm grasp of what May’s budget will look like.

How it’s done:

I don’t get very technical with this because I’ve found over the years that simple is better. Not to mention easier.

The first thing I do is pull out my household finances binder. This is where I keep our bank statements, any notes for paper checks I’ve written out and a breakdown of what to expect from the hubster’s paycheck weekly.

Using a piece of white lined paper, I draw a line down the middle (front and back). Starting on the left side of the front I mark the date that we will have money deposited in the bank and I write “week 1″. Moving along to the rest of the paper, I continue with weeks 2-4. If a month has 5 weeks I either find space on the paper I have or I add another sheet. Like I said, not very technical stuff here.\

Because we have our rent directly deposited from the hubster’s paycheck into our landlord’s account every week I don’t have to worry about getting that paid, so for us, it’s not on the budget. If you don’t direct deposit your rent or mortgage you’ll need to add that category and I suggest it be in the number 1 spot. You need a place to live!

Under each week I write what income we are expecting and from where. After I total it up, I start writing our expenses. Ours looks something like this:

4/6/12: Week 1: M- $0.00 + D (TN)-$0.00 + D (MWR)- $0.00 = $0.00

Car payment: $0.00
Gas (for car): $0.00
Food: $0.00
Cell phones: $0.00
Credit cards: $0.00
Spending: $0.00
Misc surprises: $0.00
Rollover: $0.00
Balance: $0.00

The goal is to tell every single penny where to go. If every cent has a job then none of it get wasted. The rollover category is for heating oil, car insurance premiums (we pay twice a year), car registrations, car repairs, Christmas, birthdays, etc. Having a little cushion saved up in the bank really helps soften the blow when something pops up. I continue this for the remainder of the month until I have a plan for all 4-5 weeks. There have been times when we have received more income than I had planned for. There is usually a separate plan for any “extra” money that comes in during the month. For instance, we might make an extra car payment or put some money aside for one of the kids activities. Without a plan, we’d be seriously lost (and we’d lose our money too!)

Then I add this sheet of paper to the binder under the appropriate month. (I have tabbed dividers to help me stay organized) And every Friday I pull the binder out, open up our online banking website and, after verifying that we got what we expected for income, I pay whatever bills I have specified for that week. This continues on and on and on.

It’s important to remember that budgets don’t have to be rigid. That’s why I call ours a spending plan. Plans are fluid, they move and change with your lifestyle. We all have ups and downs in life and our money is not excluded. Just remember to have some sort of plan in mind. Without it you’ll never be able to properly gauge your own spending habits and will most likely have a very difficult time saving any emergency fund or rainy day money.

What’s it like for your family? Do you write out a family budget or spending plan or do you prefer to fly by the seat of your pants?

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