Budget

Simple Simple Simple

Okay, I received an email about my budgeting system. Now, I know that several personal finance bloggers post their actual budgets, but I am not going to do that. I am going to post a very simple, 2 column budget, assuming a 1000 dollar take home. I will use 50 dollars in each category. This IS NOT an actual budget. I am just using these numbers as “place holders” for where you would put your “real” numbers. I just wanted to show how easy a simple, dimple budget can be.

Here are the steps for a simple, easy to use budget.

1. First, Start with 2 columns. You can use a spreadsheet program like Excel or just a piece of paper. In Column A put: “Take Home”. In Column B put: take home pay: Example “1000”. See example here:

Really Simple Budget
Take Home 1000

2. Now, In Column A list the 5 ways or place you use your money. I call these major categories Savings, Cash, Bills, Debt, and Checks. (This is all money that has a purpose for that pay period. Long-term savings and retirement are not included.) Savings is a major category for saving up money that will be used once a year or for unexpected needs. Cash is for day to day purchases, like groceries and gas. The Bills Category is where you place funds for your MONTHLY bills. The Debt Category is where you allocate funds for debt re-payment. (Note, you CAN put your debts under the Bills Category, but I like to separate them.) Checks is a special category I created for those constant once a month payments that I have that I do not receive and actual “bill” for. Your page should now looks something like this:

Really Simple Budget
Take Home 1000
Savings
Cash
Bills
Debt
Checks
Total 0

3. Now, break-down each category into sub-categories. These are your actual “budget” items. Your page will then look like this:

Really Simple Budget
Take Home 1000
Savings
General 50
Clothing 50
Medical 50
Life Insurance 50
Car Insurance 50
Local Taxes 50
Cash
Baby Sitter 50
Gas 50
Grocery 50
Misc. 50
Bills
Electric 50
Phone 50
Long Distance 50
Cell Phone 50
Debt
Auto 50
Credit Card 50
Home 50
Student Loan 50
Checks
Day Care 50
Gym 50
Total 0

As you can see, the numbers listed here are simply to make the math work. Please note, you should spend EVERY dollar that comes into your house, ON PAPER, before the month actually begins.

A few special notes:

I keep my “savings” category in an interest bearing savings account, and withdraw funds as needed. I keep my cash in my wallet. I keep my checks, bills, and debt payment in my basic checking account. I use online bill pay as much as possible.

Now, this is why this Simple Budget really works. You can use it for weekly, bi-weekly, or monthly pay-checks. You simply put your starting amount, and then allocate a portion of it to each account. For instance, I get paid weekly, the wife gets paid monthly. We allocate my check to several accounts weekly, and hers monthly. The allocations are not always equal, but, the total allocation for each check always leaves us with a “zero” total. We spend EVERY dime, before it comes into the house. Any money “left-over” gets to go towards debt, or towards extra savings.

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13 thoughts on “Simple Simple Simple

  1. Hi,

    I was looking at the YNAB program yesterday from your site, and I read the comments on YNAB page but would appreciate some feedback as to what you like about the program.

  2. Pingback: Wildflower » Downsizing: Paying down debt
  3. Good budget, i choose to go with ynab and i think its my smartest ever purchase and i have been following it for 3 months and on track to be debt free in 1 years time.

    oh yer great blog and some excellent info

  4. I cannot find info anywhere on how to budget if you get paid bi-weekly but the bills are all due monthly. Maybe that is silly, but sometimes i get paid twice a month and sometimes I get paid three times a month. I can’t divide my yearly income by 12 and count on that money being there because I will either have more or less that I accounted for. Help!!!

    PS – my husband gets paid twice a month, to complicate things further. I manage our money. I get him to transfer bill money twice a month and I pay the bills every two weeks. That’s fine but BUDGETING is a mystery me to with this set up.

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