Galations 2:20-21

I have been crucified with Christ; and it is no longer I who live, but Christ lives in me; and the life which I now live in the flesh I live by faith in the Son of God, who loved me and gave Himself up for me. I do not nullify the grace of God, for if righteousness comes through the Law, then Christ died needlessly." Galations 2:20-21

Monday, May 18, 2009

Family Budget

*Long Post Alert*

My husband and I have been very blessed to both not bring any debt into our marriage. Since we got married we've been very intentional about keeping it that way. During our engagement period we even put together a budget for our life after we became One. Our budget has been changed and refined a lot since then (almost 2 1/2 years ago already), but we are staying strong.

The reason I am writing this post is because I have stumbled across this website that I am really enjoying. It's called Small Notebook: for a simple home. It has a articles ranging from housekeeping & gardening to family life & money. I'm getting some great tips on how to keep our life simple and I was reading a few things last night in the money section that gave me the urge to write about how we do our family budget.

With the baby on the way, we have been thinking a lot about money and how to prepare for our growing family. We are a one income family aside from me working a few part-time jobs and selling things on ebay here and there. This is how we originally set up our budget: We first set up an Excel-type spreadsheet on our computer. One column for "Budget" and one for "Actual" spending. Then we listed by category the items along the left side of the spreadsheet. Income, mortgage payment, electricity, natural gas, water, groceries, savings, tithes/giving, grace/misc., etc.(add a debt payment column if you have debt). Before we started adding in numbers we looked at our monthly income and then our reoccurring bills (mortgage and utilities). We added in all of those numbers first (into the budget column). Some of those numbers can change from month to month, so we just looked back in our records and rounded up a few dollars. We then basically did an educated guess for the rest at first, but staying within our income limit. As the months went on we were able to pin down a better number for things such as groceries, gifts, household, etc. After every purchase or bill payment I would add those numbers into the "Actual" spent column on the spreadsheet. This means keeping every single receipt. Yes, even for that .50 cent candy bar. We set up the spreadsheet to automatically show us if we were overspending in area or underspending in another. It totaled everything up, so that at the end of the month we new if we went over budget or under budget. It's been working for us pretty well and we are already building up an emergency fund for the tough times.

As much as I like the system we've been using, we've been a little disappointed. The only way to really know how much we are spending is to make sure we were constantly checking our budget. That's kind of hard when you are on a road trip for the weekend. So, sometimes we ended up going over a little here and there. Nothing huge, just not what we wanted to happen. What we've also been doing for the past 2 1/2 years is using our credit card for every purchase we could. The thought was "Hey, we get the 1% cash back. We'll be making money." Well, statistics show people actually spend more money when they use a credit card (even if they are sticking to a budget). We were intrigued and wanted to put that to the test starting this month.

What are we doing different?
Using CASH for everything we possibly can. We are using an "envelope system." There are many out there. Search the web. Every category in our budget has an envelope with the actual cash amount for the whole month in it. So say when I go grocery shopping all the money I have for the month for groceries is in my "groceries" envelope. When I make a purchase, I take the cash out of that envelope to pay. I put the receipt and any change back in that envelope. Sounds pretty simple. It is. If we have to use our debit card for a purchase (like for shopping online) we take the cash out of the envelope for that category and put it in a separate envelope, so we know that money was spent. We are not using the spreadsheet anymore, but are still keeping the receipts just in case. This is new to us, so we are still figuring out how we want to do this (and maybe I just wanted a break from inputting every single receipt into the computer). We still think the spreadsheet method is a great way to go.

How's it going so far?
The month is more than halfway over and I am loving it. By seeing the actual dollars I am spending makes me so much more aware of how much money I am spending. I find myself trying not to spend all the money in the envelopes so there will be some left at the end of the month. We already have an envelope for savings, but how great would it be if I could add to that?

Setbacks? We ran out of our gift money pretty fast this month due to Mother's day, birthdays, a graduation, and a baptism. There just wasn't enough money in the envelope for it all, so I got to get creative. I've been teaching myself how to sew, so I've been making a few things instead of buying.

I will be writing a follow-up post at the end of the month so you can see how we did. We are pretty comfortable talking about money and our budget, so please feel free ask questions. I hope this post inspired you at the very least. Happy saving!


Anonymous said...

I love budgeting and numbers! What are the big things you're saving for in the next few years? For us it's a car and a vacation, the car for sure b/c our black one will probably last another 2-3 years before the repairs get too costly and we'll need something to fit more kids.

Have you seen We don't like using cash and use a credit card for everything and pay off at the end of the month - and that website has a program that automatically tracks it so you don't have to insert every figure on a spreadsheet when you buy a soda or candy bar.

Do you ever read Money Saving Mom's blog (i thought that you did)? She's a huge budgeter and has some really cool posts on the topic.

Racquel said...

With the baby coming, we started a "baby fund" and we are also saving for a car. Our PT cruiser won't last too many more years. Those are the only specifics right now.

Byron used to be very anti-cash, but after listening to Dave Ramsey's Financial Peace University he wanted to try this out. I'm a little nervous about keeping all that cash on me, but I'm liking how it's changed my spending habits so far. We never ran a balance on our credit card, but I am curious to see if we actually do end up spending less. Thanks for the mvelopes link. I'll show Byron in case this cash thing doesn't work out.

I can't believe I haven't come across Money Saving Mom's blog before. Thanks!