Monday, June 16, 2008

MMMoney Moday!

Another Monday! Someone asked last week about how exactly we do our budget. Oh, it's super-technical, peeps. Nooo way can you handle this if you're not way intelligent and the possessor of genes full of financial guru-ness. (Was the sarcasm heavy enough? Hope so.)

Actually, we're simpletons as far as this goes.

We follow everything with our money with Quicken, and have done so since the first week we were married. Neither of us has a written register, we just put our receipts by the computer when we get home, and enter them in to Quicken. I balance our account online every couple of days so it's never a big task and I keep and eye on our account to see if anything fishy is going on, and that it always balances.

We know exactly where our money comes from and where it goes (largely in part due to Quicken's ease of use).

  • When we set out to form a budget, long, long ago, we simply followed our habits closely in Quicken to see just how much we spend and where, to set reasonable amounts for spending. This is great for a lot of reasons, but one in particular (besides how organized it is) is that there is no hidden spending. Jim and I both know exactly where every penny goes, nothing is kept from either of us. Not only does it help us feel more like a team, but it also gives good accountability. Over the years, we've adjusted the amount we spend many times.
  • From each paycheck we receive, We tithe, we save, we pay our bills, and then the rest is for spending, or hopefully even just hanging out in our account for a while. We get paid every 2 weeks, and always have, so that's how often I take out our money.

  • We use the envelope system. Again- super complicated.... I have several envelopes, not all of which get used every time I get cash. I just decide what I need to take out of our account based on what's happening during those 2 weeks. Each envelope has a category. I spend out of the envelopes, and when the cash is gone, I either borrow from another envelope, or I just wait. I also never spend my change on normal purchases, and then I use it for spur of the moment small frivolous purchases, like Starbucks or taking the girls through Sonic for a slush if we leave the park around Happy Hour.
  • We have a dining envelope and a gas envelope, but usually I don't take out cash for these unless I have a good reason. Basically, we don't drive for fun, so we just get gas when we need it, so I don't bother with cash for that, and we also don't eat out that often, maybe once a week at the most, and it really varies, so usually I don't take out cash for that either. Our motto on eating out is to do it sparingly, so we most often eat out as something fun to do, so the spending is limited- because we aren't eating out because of necessity very often. Planning a menu, by the way, really helps me be prepared so we don't get to dinner time without a plan too often. That really cuts down on quick trips to eat out.

  • I also am flexible about spending with my check card when it seems appropriate and I don't have cash with me, like, if I find a super-good deal on something or a surprise comes up. I seem to do OK with that. I'm still more a spender than a hoarder, but Jim and I keep things in check pretty well, so it isn't much of an issue for us. I know of people who are way more hardcore about this than us. If you have a serious problem with over-spending, though, I'd suggest going to ONLY cash for a little while, just to get out of the habit. Sort of like how it's good to cut yourself off from sugar for a few days if you need to cut the addiction... You really feel the purchase when you use cash.
OK, I know you want to know, and it might even help you out, so, I'll get real with you and tell you exactly how much we spend on our top categories. The rest of the envelopes only get funded every once in a while.

For every 2 weeks, we budget...
$160.00 for Groceries
$100.00 for Household Items (Absolutely anything from stamps to batteries to deodorant to all purpose cleaner to a pillow cover from Pottery Barn.)
$20.00 for Diapers and wipes (Amen to the day that envelope goes in the trash. Maybe I'll burn it... There's a post for you...)
$20.00 for Education (Home school Supplies)

You can learn more about budgeting and the envelope system from Dave Ramsey or Crown. Both of these are excellent and have lots of good and free online tools to help you organize your spending, get a handle on your debt and create a budget.

Remember, it's all about telling your money where to go, because if it's going to go no matter what, you might as well be in charge. And for us, it's also about trying to be a good steward of all God's given us to use- because it's all His.

Happy Monday, one and all.


Unknown said...

We totally need to get back to something like this...I was doing it when I was working, but now we don't get paychecks, and Kevin does all the bills, we got away from it. He wants me to put everything on one credit card for simplicity's sake, but it's WAY easy to overspend (for me) that way!

Grammy Staffy said...

Wow, I wish that I'd had you to be a guest speaker in my on your own class I taught to seniors each year. I tried to impress them about the importance of having a budget and a good financial plan but I don't know if they listened.

You are so wise. I know that you will be blessed because of your financial disipline. I hope that your readers follow your good advice.

Ris said...

Great tips! we use our credit card for two reasons- 1. We get miles for every dollar we spend and 2. If you purchase something, and it has a problem, you can dispute the charge. (for instance, if you bought airline tickets and the airline goes out of business, you'd have a chance to get your money back- unlike a debit card, which is like cash. We just make sure to always pay off our card every month so we don't have interest charges. (plus helps me not worry about going a little over and having to put food back at the checkout if I didn't have enough cash)

We also use Quicken. Hubby is an accountant and that's his fav program. Every cent IS accounted for and we run reports to see where it went. (hate those reports sometimes, LOL) I agree, its a great system!!

Ris said...

oh and PS, I used to use envelopes and loved it, but go with whatever Hubby wants since he's our money genius. I am terrible at that stuff so am so glad to have him handle it! I think its awesome you have a method and budget...very smart of you guys!!!

amanda said...

i puffy heart dave :)

we just sat down last night and did the budget. is it sad that it's kinda like our date night?

Don Mills Diva said...

I'm so impressed with your organizational skills - we spend nearly 2x that on groceries!

Eva said...

Way good post Megan. You kind of made me feel better about how good we really are doing. We don't use Quicken or envelopes, but Terry does a spreadsheet budget and we really try to stick to it. I appreciated seeing the different catergories you have and even what you spend on them =). Thanks for being so open about that! I think it would maybe help us to break down our grocery bill to household needs and diapers too. We just do one lump sum in groceries that incorporates food, household and diapers so it's very difficult to stick to since it varies through the months. Trying to get Noah potty trained so the diaper bill can go down (looking forward to burning that "envelope" as well). But thanks a bunch for this post!

Lisa said...

Have I told you lately how awesome you are? Last week & figured out the two week meal plan, even with the Megan categories (crock pot, pasta, etc) and so far so good! I'm hoping it will save us $$$ on groceries & make life a little less chaotic!!!

PS - I'm feeling well & promise to post more about it sometime soon! Thanks for your thoughts & prayers though!!!

4funboys said...

wow... that is impressive!!! The fact that you're so good with your money, AND that that's all you spend on food.

My husband doesn't even know what our house payment is... much less how much we spend on food every week.

(and I don't know that either, but I can tell you that we spend more on snacks every week than you spend in entire month on groceries!)


The only payment we have that is the same every month is the boys $2900 school payment... and it kills me.

Megan said...

well, i think the reason that our grocery bills are so low (about $320 a month) is that we almost never, ever, use prepackaged foods. i make everything at home, (have i mentioned how great cooks illustrated is???? ahem...) and, most of our grocery money is spent on milk and fruit. we spend a LOT of money on fruit and veggies, which is sort of my for everything else, things rarely come in a can or a wrapper...

Andrea@Sgt and Mrs Hub said...

Daniel just took over doing the finances... Can I get a little Hallelujah!??

I did good, but the time and energy it took was more than I can give right now.

We'll see how he handles it. I've seen spreadsheets and all sorts of fancy things going on so far... this could be interesting!

I'm all about the envelope burning party! What can I bring? ;)


Kristen said...

What a great job you guys do!

We have never done the budget thing, I just have a hubby who is super tight with money, and having to explain to him why I "needed" it is my budget. I would rather just not buy it!

Although, I would totally need a Target envelope! :)

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