I’ve lived with my fiancé since May 2018, and had to pay for my own expenses since August 2015, and I’ve basically never had a working budget (yikes!). I tried a lot of budgeting software, like Mint, but I couldn’t manage to make myself look at them or bother fixing my transactions when they inevitably were categorized wrong.
On August 2nd, I decided to try my hand at making a budget all on paper, that I could customize to my own liking and that no one other than me and my fiancé (Dan) would have to see (except for all of you…). So far, it’s day 11 and it’s going really well (and we haven’t jumped over our budget in any areas – although if we do, I have a plan for that too).
Our Financial Situation Pre-Budget
So, this is a little complicated right now because we’re trying to plan our wedding (October 5th here we come!) and our honeymoon right now, along with paying off debt.
We owe about $6,500 for our wedding, want to have about $1,000 more for our honeymoon, and have about $60,000 in debt (mostly my student loans and car). For right now, since our wedding is so soon, debt is taking the back burner. However, in a few months I’ll do a post on how we plan to use the debt snowball method.
How I Created the Budget
One thing to say before I start is that this is a zero-based budget – which basically means, when you subtract all the expenses from the income, you should have $0 left over. I wound up with about $3.00 left over, which I applied to my fiancé’s fun money. That doesn’t mean you’re spending every cent; some of it should be for savings if you can!
1) Calculate Income
The first thing I did is calculate our income for each month. My fiancé gets paid once a month, and he is not based on hours, so I could get that pretty quickly. I generally work a full 40 hours and am paid on the 1st and 15th, so I doubled my last paycheck for a pretty accurate view of my income.
2) Calculate Fixed Expenses
Next, I went through our bank statements and picked out every bill we have month to month, and some that I knew we’d have to pay this month (like a hospital bill that was coming due and I had to pay off in full this month). That took up about 2/3 of our money.
3) Decide on Savings
Since this is our first budget, I decided to just save about what we normally do, which is approximately 10-15% of our income. It would be great if it was higher, but this is what we can handle right now with our debt and other expenses. We also aren’t particularly frugal with the biggest expense, which is…
Food is a big one! I combine eating out and groceries into one single category, which is just easier for me. I can also include trips to the vending machine (which is the reason I can’t do a cash-based budget, or else I’d spend it all on Butterfingers…) in the food category. I pick an amount for this that’s a little less than we normally spend, but still reasonable. For our family, this is about $1000 a month as my fiancé eats out for lunch every day.
5) Other Variable Expenses
There are lots of other categories for variable expenses we have to decide on. You can come up with your own categories, but ours are pets (we have two cats and a dog), gas, ‘going out’ (either to events around our city or to the bar), fun money for me, fun money for him, and ‘necessities’ (which is basically buying hygiene products or clothes).
This month, as well as September and October, we have a special ‘wedding and honeymoon’ category which is just to record things we spend out of our savings for the wedding or honeymoon. I don’t have a budget for it, and I don’t include it in our normal budget because we aren’t adding very much money to this category month to month. Next month we will be, since we will have to finish paying for everything.
How We Use the Budget
Every day, when my fiancé gets home, we go through any transactions he paid for at work (usually lunch), and anything I paid for during the course of my workday. On the weekends, we record them as soon as we get home from wherever we were shopping. I basically record this in a basic log, with the date, place, and amount, as well as what’s left to spend in that category.
My fiancé decided yesterday to make his own spreadsheet that matches my paper budget, which I’m offering as a freebie for signing up for my newsletter.
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I personally find it more understandable to track my budget on paper.
One more thing I often do is ‘transfers’, which is basically moving money around from category to category. I think the budget should be a living document, which will get more evened out as months go on. For example, we severely over budgeted for ‘going out’ this month, so I have moved money into other categories as I saw fit when I needed them (like how I forgot I was finishing a tattoo this month and needed a bit of extra money in my fun money).
What We Will Do Differently Next Month
I’m not sure how much we will do differently, other than trying to get more accurate budgets in the first place (but that’s an ongoing process). I mainly need to work on the physical format of my budget; I clearly needed a lot more room for everything and I definitely didn’t leave enough room for all the logs.