So our daycare provider gave us her notice last week and we are going to be seeing a large increase in daycare costs. This means we need a strict budget. Please someone help me set one up! I have never had a budget before and am not sure where to start!
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@cheert16: do you put all your spending on one account? Like both of you use a debit card?
Besides sitting down and listing your bills, I would download a debit or credit card statement from a past 30 day period and categorize everything into buckets that make sense for you. Get a feel for what your spending has been and then look where to tighten up
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@T.H.O.U.: Nope- I have my paycheck put into 2 accounts and DH has his put into a different one. I def will DL monthly statements to see where I have been spending $$
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Highly recommend Mint.com as at least a starting place!
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The way I do it is write down how much income you have per month and how often it comes in. Then make a plan for how you will spend it on each date. Spend means save too....you pay yourself a 'reserve' amount to put aside for rainy days.
First minus the big monthly stuff, like mortgage, utilities, childcare. Then estimate the semi-variable weekly stuff like groceries per week and multiply by 4. Do the same for gas, events, etc. Figure out where/when you will subtract it from your budget. Align it with a specific income date.Hope this helps you start! P.S. Use a spreadsheet and learn how to use the 'sum' feature. Highlight cells you want to add and press this 'sum' symbol.
It looks like this: -
You need a budget has been a lifesaver for us!
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I write down our monthly expenses and amounts-
Mortgage
Utilities (gas, electricity, sewer)
Car payments
Gas
Car insurance
Health insurance
Credit card / student loan debt
Phone
Food
Household Goods (ex: toilet paper, paper towels)
Personal (usually a small amount for clothes, hair cuts, etc)
Savings: emergency fund, LO college fund, general savingsThen I go through and allocate X amount to each category. If you're setting up a budget for the first time, it'll help to look through the last 2-3 months of bank statements to see where your money is going.
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Another recommendation for You Need a Budget. I love the software and the whole approach. That said, they just (like a few days ago) released a new version that I haven't tried. They offer a free trial so it could be worth checking out!
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Do you have a good handle on what your expenses are? I would begin there and see what you can group together as categories...that will give you the line items for your budget.
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Very happy with the You Need a Budget (YNAB) software. It has transformed our finances!
But as a starting point, like others recommended, you've gotta see where the money has been going before you can make a plan for where you want it to go in the future. So, look at the last month or two of statements to see how much you spend in each category. Let that help you make your budget.
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@cheert16: Hows it coming?
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@T.H.O.U.: I signed up for Mint last night and entered some of my information into it. I was SHOCKED to see how much i spent on COFFEE the last month!
In mint is there a way to add variable expenses EX: car insurance, cable, electricity- etc? -
@cheert16: You didn't ask me, but... Yes, there is. They have you budget for it monthly, but you put in the date of the expense. See below picture:
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@LBee: thanks! thats super helpful!
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I just do mine on a spreadsheet. I find that so much easier than Mint.
What I do is figure our monthly income and then our fixed monthly expenses. If there are expenses that are quarterly or annual, I calculate the monthly portion and then include that as well. Looking through previous statements, figure estimates for regular expenses that are not fixed (such as gas, groceries, etc.). With the remaining amount I will set aside a certain amount for savings and then the remainder is available for discretionary spending.
One thing that has worked really well for me in the past is to have a separate account for discretionary spending. If there is no money in the account then I can't spend it. -
We are pretty low-tech when it comes to the budgeting stuff. Every month (or we try) to sit down and write a written budget on paper based on what we made the previous month (this is because we have a business on top of regular salary and it varies our income month to month). We follow Dave Ramsey's method, so we spend every dollar on paper so that every dollar has a purpose and a plan. Then we just stick to it. Here are the forms for the budget worksheets:
https://www.daveramsey.com/budgeting/how-to-budget/
We then input the paper budget into Mint and then check how we're doing on our phones during the month.
I will say that the first few months are the hardest - you're learning the ropes, you forget to categorize things, you find out certain categories don't work for your family, you become overly ambitious and bust your budget on something, etc. That's when you want to give up, but promise yourself you will give yourself at LEAST 3 months, but more like 6 months, to learn how to do this. 3-6 months is a drop in the bucket for learning how to manage your money for the rest of your life. Spend at least a month or two just looking at your expenses and getting a handle on where you money goes, like previous posters have said, and then set reasonable expectations on things like coffee. We used to spend a lot on random soda/coffee runs at work but then we figured out buying tastier, more expensive coffee and making it ourselves at home was WAY cheaper than Starbucks, so now we make it point to buy gourmet coffee whenever we travel and its something we look forward to in the morning. We also just pack a can of soda in our bags! We still have money for coffee and soda, but we have more control over ourselves because we can say 'well this can of pop costs me $.25 if I bring it from home,' or 'my Jamaican Blue Mountain coffee tastes SOOO much better than this $4 burnt Starbucks coffee."
The nice part is once you get the hang of budgeting, it makes your spending a lot more predictable. So even if you have a month or two where you don't have time to sit down and set your budget, things will stay afloat using last month's budget as a template.
Dave Ramsey talks about having a $1000 emergency fund, but we like to have $2000 minimum on hand because that's about what a really bad car repair or some bad maintenance issue at our house would cost. So I would try to build that cushion up so you have that peace of mind.
Good luck!
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@cheert16: Great job! Yes, just seeing everything categorized can help you make more conscious decisions!
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@gingerbebe: Looking over my transactions (and i know it was Christmas so i was spending WAY more than i normally do on gifts etc) I was SHOCKED how many were from Target or coffee shops. Like WAY too many! I think its hard because we almost at months end for this month- maybe it will be easier to look at when the new year starts! Its defiantly a necessity at this point to have this budget (as our daycare costs have doubled) leaving VERY VERY little at the end of the month. Most extra things (like coffee runs, dinner out, etc) have been totally deleted from the budget all together. Its going to be hard for awhile.... but i am hoping that having a "no spend" January will help!
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@cheert16: Yes, things like Target and Costco is hard because you're usually buying things like groceries AND random stuff like toys or diapers or a random cardigan, etc. So one thing we learned quickly was a "grocery" budget didn't work for us! Instead we have one big household category and it includes groceries, cleaning products, diapers, lightbulbs, or anything I can buy at Costco or Target. Then we have a separate line item for eating out and if I know a big Target or Costco run is going to be mostly gifts, I try to make that purchase separately then I make a note of it on the receipt and recategorize it in Mint on my phone so it doesn't come out of the wrong budget!
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This is an awesome budget site with a free apple app. It is free, but if you want it to automatically load transactions from your bank account into the program there is a fee. But if you don't want to pay the fee you can just enter the transactions yourself!
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