Each month we print out a blank monthly budget worksheet and start filling it out based on what we expect our expenses to be for the month. Some questions we ask ourselves:
- Are we planning to get haircuts this month?
- What season is it...will our gas bill (heat) or electric bill (A/C) cost more or less?
- Are we going to take a month off from going out to eat?
- Are there any annual/semi-annual/quarterly bills due this month?
Next, we add up all of the budgeted amounts in each category (auto, food, bills, etc). We like having categories because it balances out when you spend more in one area of a category and less in another. For example, in our Food & Dining category...groceries and dining out usually correspond with each other. If we buy more groceries, chances are we will go out to eat less and vice versa.
Then we take the sum of the budgeted amounts in each category and subtract it from our expected income. We put this "leftover" money in our Everything Else category. It could probably be called our Emergency Fund (which we were glad to have last summer when our A/C died, or when we had to call a critter catcher to evict the squirrel living in our attic...you know, all the fun life events like that). The main purpose of the Everything Else category for us is to provide some cushion in our budget for unexpected or extra expenses.
As we pay bills, we fill in the amounts for those expenses on our Bill Tracker and Budget Worksheet. Using the bill tracker helps us see trends in our fluctuating monthly bills to help us budget for the future.
After the month has ended, we go back and fill in the blank areas, like gas and food that have multiple transactions, and add up each category's actual amounts. Then we add all the categories together and fill out the actual expenses box at the top. We subtract our expenses from our income and see what our Take Home amount was...hopefully it's a positive number!!
A shortened version of the math:
Beginning of month
Add up budgeted expenses for each category
Add up budgeted expenses from all categories (excluding Everything Else category)
Subtract sum of all budgeted expenses from budgeted income (we'll call this "leftover" money)
Record "leftover" money in Everything Else category under budget
End of month
Add up actual expenses in each category
Add up actual expenses from all categories (including Everything Else category)
Subtract actual expenses from budgeted expenses (and actual income from budgeted income)
Find the difference by subtracting Total Expenses from Total Income
This is how much you "took home" for the month...Positive number is a surplus for the month, Negative means you spent more than you made
Here is a sample filled out Monthly Budget Worksheet:
Check back on Friday for your free blank version of the Monthly Budget Worksheet!
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