Over the last few months our budget has changed drastically. We bought our first home in September of 2020 and now we’re paying mortgage, HOA and utilities that we weren’t paying before. Most of our income use to go to savings and now were trying to find a balance between saving, paying off debt and living expenses. Here is how I budget, for now, it always seems to change. I will also give you some real numbers but keep in mind that we live in Southern CA so our expenses may seem outrageous if you live in other areas. I guess that’s the price we pay for great weather all year.
To make my monthly budget I use a regular spiral notebook. Nothing fancy, I prefer pen and paper. Here is the exact notebook I use if you’re curious https://amzn.to/37hnTMP
The first thing I do when creating my monthly budget is determine our monthly income. Not our gross income, the amount that actually gets deposited into our bank account.
Tip #1-Send money into your savings account before you do anything else. A big mistake people make when budgeting is paying bills and giving themselves spending money before they contribute to their savings account. If you wait until all your bills are paid and all your spending money is accounted for you will probably have very little if anything to send to your savings account. So make savings a priority.
After we’ve determined the amount we are sending to savings we then move on to our fixed expenses. These are bills or expenses that are due every month and the amount is the same from month to month. Our fixed expenses include mortgage, utilities, phone bill, child care, internet, HOA, insurance & a few others.
Tip #2-You can change your fixed expenses. Try looking for quotes with other insurance companies, call your internet company and ask for a discount or cancel subscription services that are not being used.
Next I move on to our variable expenses. These are things that are irregular or have fluctuating amounts from month to month. Some of our variable expenses are groceries, Costco, spending money & eating-out.
Tip #3-Variable expenses are where you can really cut your costs and make your money stretch. The grocery budget is the easiest place to start when looking to save some money. You can also lower or eliminate spending money or eating-out for a period of time to help you get on track with expenses.
Once I have all of our expenses accounted for I take our total income and subtract our savings, our fixed expenses and our variable expenses. Any money left over will go toward paying down any outstanding debt that we have like credit cards or student loans.
Tip #4-If you don’t have any money left over that’s ok! As long as you are paying your bills and paying the minimum to your debt you are doing fine. Start to evaluate your budget and see where you can cut or eliminate expenses. Any “extra” money you find should go toward paying off debt. Once your debt is paid off you will have a lot more money to spend or to save.
This is our actual 02/2021 budget. Please excuse the hand writing but since my platform is all about budgeting I thought it might be helpful to see some real numbers. I did block out our income but everything else is an accurate estimation of what we intend to spend this month.
At the end of the month I will go back and compare my written budget with our actual expenses. From there I can see how we did for the month and what areas we need to work on for next month.
There you have it. It’s not that exciting but hopefully this was helpful or at least inspired you to start a budget. I will link the video below of me writing out my budget for those of you who would like to see it. I am also trying out some new budgeting apps and I will be sure to share my thoughts in a future post. Please feel free to share your budgeting tips with me and we can keep each other accountable!
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