Thursday, November 17, 2011

Financial Fitness: The "B" Word

It would be entirely dishonest to say that setting up a budget is “fun”. It is, however, completely necessary. Over the last few months, I have dreaded our bi-monthly budgeting less as we have more control over where our money goes and how it’s being spent.  Like everyone says {and I agree}: It’s important to know where your money goes. Setting up a budget allows you to tell your money where you want it to go.

Over the last few months, Hubby and I have spent hours {literally} going over our budget. Every two weeks, we spend about an hour discussing when, where, and how we will spend. I don't anticipate it will always take that long, but for now, it's a discipline that we have embraced. Every two weeks we go through the following steps:

 Step One: For each paycheck, we start with our income and gradually work our way through the next two weeks making a list of all of the bills that are due {mobile phone, internet, storage unit, etc.} until we have reached the next paycheck. Side bar: I find that it works best to do this every two weeks instead of just once a month. It keeps us accountable to each other and very motivated to complete our goals. Plus, our paycycle is every two weeks, so it just makes sense to follow it.

An example of our bi-monthly budget for bills:

  • Mobile Phone Bill: $180

  • Storage: $120

  • Netflix: $7.99

Step Two: After we have paid all bills {or simply marked that they will be debited}, we make a list of all of the things that are coming up: occasions to purchase gifts, dinner dates, activities, etc. We make a list and prioritize what we need to have available.

An example of irregular occasions:

  • Movie night: $25

  • Friend’s birthday party: $30

  • Family birthday gift: $25

  • Bridesmaid dress: $120

Step Three: We have a debt payoff goal amount {to be discussed next time} which we have broken it down into 12 monthly goals. Each time we sit down to do the budget, we have a specific amount of money earmarked for debt-only payments. This is a handy reminder that our end goal is still to have no debt.

 An example of our bi-monthly budget for debt:

  • Student Loan: $290

  • Consumer Debt: $900

Step Four: We allocate our remaining expenses into the following categories and take out cash to make all purchases. Cash has proven a very effective way to hold us accountable to our spending and to stay within our budget. We have an accordion file with various sections labeled {clothes, groceries, dining out, etc.} where we keep our cash. If there are certain purchases we would rather make with a debit card {fuel, online shopping, etc.}, we simply leave the amount in our checking account, and indicate on our budget worksheet. Side Note: We track our cash withdrawals from previous weeks to give us an idea of what we should withdrawal for each category. We adjust as necessary. For example: if there’s a week where we want to dine out more than cook meals at home, we will adjust our grocery budget to be smaller and our dining out budget to be larger. We remain flexible with our spending budget to adjust categories accordingly.

 An example of our bi-monthly budget for spending:   

  • Groceries: $140 (cash)

  • Dining Out: $80 (cash)

  • Target: $40 (cash)

  • Haircut: $20 (cash)

  • Lennon: $40 (cash)

  • Transportation: $40 (cash)

  • Gifts: $20 (cash)

  • PJ: $20 (cash)

  • Hubby: $20 (cash)

  • Fuel: $20

{Rinse. Repeat. Every Two Weeks.}

So there it is, folks: our budgeting steps. Do you and your partner have a monthly or bi-monthly budget? I'm interested to know how others tackle the "b" word.

Note: This is a series on the blog to share our path to financial fitness. We are no experts in personal finance. We are, however, on our way to becoming smart{er} consumers.


  1. Yes! My husband and I also budget - we keep a shared google doc and have separate pages for each month. We keep a column for Item, Estimated Cost, How much we actually paid, and the date we paid it. We also have a 'miscellaneous items' section where we write down the little things and total it up, too.

    It's not easy, but it's totally worth it. Congrats on going head-on and tackling your debt!! :)

  2. This is fantastic! I don't have a monthly budget and as many more of my friends are getting pregnant I start to differently my life and cost of living would be if I were them. I need to get on a budget - I wasn't smart about saving money before, but I need to get better. Thank you for sharing this - it's really inspiring.

  3. Hi Sarah -
    Yay! I'm glad that you also have found a system that works for you. Hubby and I use Google Calendar to keep track of when all our bills are due {I have a post coming up about tips/tricks for keeping track of everything}. I never through about a Google Doc! Such a great idea. Thanks for stopping by!

  4. loved reading this! i've been wanting to redo our budget too and figure out a better system. i like the paying for everything in cash idea, that's really good! i think we'll be trying that.

  5. this reminds me that i need to get our budget in order. i was away on a trip for 3 weeks and since i've been back, i haven't had the time to prioritize and organize the bills. eeps.

    thanks for sharing! i should use google doc. i've been using to help out...

    PS. i'm having a $50 giftcard GIVEAWAY on my blog. would love to have you as a follower... hope you'll stop by & join! :)


    cindy - design3rd

  6. That's exactly what I think about! Budgeting is just a great way to control your spending and prioritize where you want the $$ to go. If it's on dining out/handbags, so be it! But at least there's a plan.

  7. I hope it works for you too! Cash really has been a great way to control our spending.

  8. Hi Cindy -
    Thanks for stopping by! Yes, I also love it's a great way to track purchases and set goals!

  9. [...] the minimum payments for each card. Then, we took the amount that we set for debt payments from our budget, minus the minimum payments. This gave us the extra amount to apply to our debt. It ends up looking [...]

  10. [...] you’re interested to see how we did it, reference blog posts one, two, three, and [...]


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