One of my best friends, Coralee, doesn't think I post often enough anymore. She figures I do nothing all day, so I should be able to post at least once a day! Hahaha. This is for your, Cor!
Yesterday Cor came over and I helped her make a budget like we do. I have been using a budget for a few years, but just over a year ago we switched to a cash only budget. I had been watching the show Till Debt Do Us Part with
Gail Vax Oxlade and that is what she does with all the couples on that show.
Now I no money guru. In fact, historically I am terrible with money. I have gotten myself into a lot of trouble with money. Trouble I am STILL paying for today. But this method has really helped me to learn how to handle money. We are now well on our way out of debt, and even have some money in savings. All the bills get paid on time and there is no more scrounging around at the end of the month when the loans come out! In fact, in less than a year the only personal debt we will have is a mortgage (unless we decide to get another vehicle, of course). This is what we do:
I used Excel to make a spreadsheet with two categories: Fixed and Variable.
The fixed expenses are things like mortgage, loans, hydro, telephone, cell phone, tv, car insurance, life insurance, house insurance. I pay all these things online at the beginning of the month, or they come out automatically, and hydro I write a check out.
Variables are things like food, gas, clothes, gifts, pets, entertainment, miscellaneous, personal money and tithe. I take out cash for all these categories at the beginning of the month and put them into bags. You can use jars if you want. And then that is all the money we have for those things for the entire month. It works for us to take out all the money at once because Eric's only gets paid once a month. But for some people they take it out once a week, or twice a month. Depending on how they get paid.
I guess technically there is a 3rd and 4th category: Savings and Debt Repayment. I have savings set up online to transfer a set amount on the first of every month to two accounts : Personal Savings and Tallet's Savings. This way I don't have to worry about transferring it every month, it is automatically done for me. We also have a set amount for debt repayment every month, I do that online too.
If we want extra things over and above out budget, we use savings for that. Things like car repairs and large purchases like a breast pump.
Something that is a necessity for a cash budget is to take your debit card (and credit cards if you use them) out of your wallet/purse. This is something I didn't do at first, but then I found myself using my debit card when I ran out of money for certain categories. And then that meant I would have to readjust the budget for the next month to make up for the shortage. I budget down to the last dollar, so there is not room in the budget to do that. Just take the cards out of your wallet so there is no temptation to do that. Freeze your cards if you need to. That way if you need to use them for something, you have a while to think about it before you do. We use the debit card strictly for accessing the savings for the extra things.
I do feel stupid when I go to the store and take money of of a baggie to pay. And I am pretty bad at spending most of the food and miscellaneous money at the beginning of the month and then I scrimp the rest of the month. I need to learn to spread it out a bit better.
I highly recommend using this method. I used to budget by using quicken and tracking every purchase on the computer, but I often got backlogged and it was complicated. This method is easy and it works.
