Hellobee

It’s a new year, which means it’s time to tackle those naggling tasks that we put off over the holidays. Clean start, and all that.

This year, due to some changes in income, we are tweaking our budget to squeeze it a bit tighter. I wanted to give an overview of how we budget, plus some of my best budgeting tips.

We do the majority of our budgeting freehand using Google Spreadsheets. They’re totally free, you can share with your partner so that you both have access to edit, and it updates the sheet instantly for all users any time someone makes an edit. It took a bit of convincing to get Mr. Cotton Candy to make the switch from Excel, but I can’t overemphasize how life-changing it was to get a budget document that we can share in real time. It improved our budgeting and relationship so much, and now he’s pretty much used to the quirks of Google’s spreadsheet software.

Ours is a pretty simple system that can be customized to whatever your budgeting needs may be. The entire year is contained in one tab of the spreadsheet, and each month is represented by a column. In each month, we include top level categories for: Income, Bills, Expenses, Allowance, Gifts, Vacation, and Savings. Then those top-level categories get broken into the following subcategories.

Income:

• Mr. Cotton Candy’s Paycheck
• Mrs. Cotton Candy’s Paycheck(s)
• Taxes/Escrow (Usually we owe instead of getting a refund, but for some reason we keep this in the income category.)
• Gifts/Items Sold/Miscellaneous Income

• Mortgage
• Student Loan
• Car Payment
• Insurance
• Electric/Water
• Gas
• Cell Phone
• Cable/Internet
• Netflix/Hulu, etc.
• Miscellaneous Loan Payments (like if we open a 0% interest credit card to buy an appliance)
• Credit Card and Bank Fees, Interest, etc.

Expenses:

• Groceries
• Home Maintenance
• Home New Purchases (furniture, decor, etc.)
• House Supplies (cleaning, light bulbs, air filters, etc.)
• Gas for Cars
• Car Maintenance
• Car Operations (registration, parking, etc.)
• Medical
• Preschool/Babysitters
• Little Cotton Candy Expenses (clothes, pull-ups, etc.)
• Work Expenses
• Mail/Legal/Charity

Allowance:

• Mr. Cotton Candy
• Mrs. Cotton Candy
• Healthy Allowance (gym membership/Daily Burn subscription)

Gifts:

• Cotton Candy Birthdays
• Other Birthdays
• Holidays/Anniversary

Vacation:

• Airfare
• Transportation (buses, trains, taxis, etc.)
• Lodging
• Food/Drink/Spending

Savings:

• 3 Months’ Expenses
• Little Cotton Candy
• Mrs. Cotton Candy Retirement

Whew. That’s a lot of subcategories. Each year we tweak these: combine, add, eliminate. We record all inputs and outputs to the budget. Yes, we save each receipt and put it in; we round up or down to the dollar for simplicity. It also helps that we each have the Google Drive app on our phones and can update on the go instead of having to stuff receipts into wallets or purses.

If you’re a spreadsheet wiz, you can set up formulas to automatically calculate your actual spending and saving. We have a column at the beginning that lists our “usual” spending for each category for the year, and a column at the end that adds up our actual spending for the year in each category. If you have any questions about how our budget is set up, ask me in the comments and I can get Mr. Cotton Candy to answer.

So, what are my best tips for creating and sticking to a budget?

1. Just do it. Seriously, creating a budget is the single greatest thing we have done for our finances. It helps us to keep track of our spending, which helps rein it in, and it is great for getting a big picture idea of our financial behaviors and goals. When we started budgeting, we had a LOT more debt: credit card debt, even more student loans, two car payments. And we often overdrafted our bank account or overspent on credit cards because we didn’t have a clear idea of how much money we had to spend.
2. Give yourself some discretionary spending. Creating our allowance category was the key that solved everything in the way our budget operates. We each have $250 of spending each month that we are not accountable to the other person for whatsoever. It may sound like a lot, but keep in mind this number includes all dining, bars, and clothing & makeup purchases (unless I sneak some in at the grocery store). We adjust this budget fairly often, depending on income and whatever goals we have for the year. But adding this “free” category that we can use for whatever we want without accounting to each other was a game-changer.
3. Share, share, share. Make sure that if one of you is the one doing the bulk of the budget creation that you keep your partner included. In the beginning when Mr. Cotton Candy first started doing the budget, it drove me crazy that he would work on it on his computer in Excel and that I didn’t have access to see it whenever I wanted or to make changes. He wasn’t trying to make me feel shut out from these decisions, but that is how I ended up feeling.
4. Go easy on yourself. We see a budget as a guideline and a way to keep our spending in line with the lifestyle we want; we don’t see it as a prison. If we decide we really want to buy that sweet mid-century dresser we found on Craigslist, we will talk about it, look at the budget, and go for it if it doesn’t strain things too much. We sometimes add allowance spending to the following month if we go a little crazy one month. In the end, even if we go “over budget,” we’re still in better shape overall than if we didn’t keep track of our spending.
5. Use Mint.com to see all of your accounts at a glance. Despite how much I love our completely self-created budgeting system, I also really like seeing all of our debts and holdings in one place. I have added all of our accounts to Mint.com, and I can check in any time and see how much money we owe, what my retirement account balance is, or how much of a cushion we have in our checking account for the rest of the month. I highly recommend Mint for this purpose, though I don’t personally use any of their budgeting tools.

Do you keep a budget? Who is primarily responsible for it in your home? Do you have any great budgeting tips?