Creating a budget
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| Could you not add them all up divide them over the 12 months of the year and put that into a seperate account to be used when needed? |
Good thread! I was wondering the same thing.  |
| I find that it works best for me to do a spread sheet and if an expense comes up every 6 weeks that's when it goes in. It doesn't make sense to make a montly budget unless you get paid monthy.
I get paid biweekly so I have a budget for each pay period. my big expenses like mortgage and insurances I do deposit biweekly into an escrow type account. Dog training and feed gets budgeted every 6 or 8 or whatever weeks. remember though a budget is a living breathing document and you need to be able to adjust spending up or down as inputs (pay, gas prices! etc ) change. |
| I've always lived by a written budget and here's how I handle non-monthly expenses. I take the annual figure for car insurance, homeowners insurance, property taxes, etc., add them all up and divide them by 52 (we both get paid weekly). That amount goes into a separate savings account until it's needed. Also gives us the peace of mind knowing that when the tax bills or insurances come due, the money is there. In the meantime I'm earning interest on that money, an added bonus.
We had a friend once who never budgeted for his property taxes - just paid them out of one check when they came due. Nice, if your paycheck is big enough that you can afford to do that without jeopardizing paying your other bills, but as young, broke marrieds, we couldn't afford to do that. This method has served us well, so we've just kept it. |
Paula O. wrote: And Bob gets new shoes every 6 weeks (Darcy and Jill are jealous), so how does that figure into a "monthly" budget?
I'd be miserable if I had to wait 6 weeks in between shoe purchases! Good thing Bob is a boy. |
| I figure out our monthly expenses: car payments, house payment, utilities, food (I include dog food here), gas, anything that is regular. I also have a broad category called: misc that includes smaller, unplanned expenses such as a surprise (smaller) vet bill, small car repair, etc. And we also have a sum of cash that we use as 'walking around money--hair cuts, lunches, small purchases, movies, etc.) I add this up, and this is our monthly budget. The rest of our money goes straight into our savings acct.
How did I know how much to put into each category? I looked at our bills and checking acct over a few months (for utilities, over a year or more since it varies by season). This is a good practice to do periodically. Actuallly add up what you really spent on food, entertainment (I include entertainment in our cash allowance). If I notice that I'm spending more than I allocated, I look at why. Have prices gone up and I need to allocate more/cut back? Have I been sloppy and over-spending? Adjust accordingly. The money from our savings acct. accumulates and this is what I draw from for regular expenses that occur only a few times a year: car insurance, tuition for the kids are what leap to mind. I also use this to cover unexpected large bills: the van needed major repairs this past winter. We used the savings acct. My husband's job also offers a medical savings plan, but we have to pay out the money in the first place and then it gets re-imbursed. For smaller amounts, it comes out of misc. If there is a big one, it comes out of savings. When we get re-imbursed, the money goes back into the acct. it came from. We just took only the second vacation we've taken in 30 years together. My husband actually wants to go again next year, so I am in the process of setting up an acct. with my credit union into which part of my pay check will be deposited automatically. The key is automatic deposit. I don't 'count' the money that goes into our savings acct. until/unless I need it. And it needs to be important: large, unexpected bill. Regular large bill that occurs a couple of times a year. You have a specific goal: farmette. Do you have an idea of how much money you need to have to realize this dream? For a down payment or outright purchase? An idea of what your monthly expenses (mortgage, for example) would be? Suppose you needed a down payment of $20,000 and the new mortgage would be about the same as your current mortgage. How much from your current spending can you allocate to this new category? If you could save $500/month, you could reach your goal in under 4 years. Since you have a goal to reach in a few years, you could put the money into CDs with a 36 or 48 month maturity and accumulate money (a little) faster. Set it up automatically. If you have access to a credit union, take advantage of this. They usually offer better interest rates on loans to members. |
tgir wrote: The key is automatic deposit. I don't 'count' the money that goes into our savings acct. until/unless I need it. And it needs to be important: large, unexpected bill. Regular large bill that occurs a couple of times a year. Thank goodness for automatic deposits and (  ) debits. it does make it easier to stay on track. |
| We handle our money very similar to TGIR, but I get paid monthly and my husband gets paid twice a month.
As much as possible, we put our purchases on a Discover - we like the moeny back and makes keeping up with our budget easier. Except for a cruise we took in 1980 (and then only one month), we've never carried a balance on our cards. We like the idea of using their money for a few days for free. We have one savings account that we have divided up. Everytime the money goes in savings, we designate it for one of the sub accounts. For instance, I have a "Ben account" to pay for any emergencies and their annual vet trips and meds. Any money over and above the amount that I feel I have to have in there is my mad money. I've bought Christmas dishes with it, over several years. I hope to finish it this year. Some of the money is for my daughter's tutition, which is paid for each of the three semesters. Retirement money is in 401K, CDs, TRS and it is separate - we actually stopped putting into retirement a couple of years ago wen we had 3 in college and have started again since we are down to one in school. We have a small notbook with everything listed out and additions/subtractions noted. It makes it easier to reconsile each month. |
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