This is How We Budget


(Note: Title to be sung to the tune of “This is How We Do It”. Yeah, you got it.)

Ah, budgeting. My little heart beats wildly at the thought of it. My husband’s heart however, does not. It took a few years for us to get on the same page budget-wise, and it’s still a constant conversation. It’s well worth it, though, because once you know where your money goes each month, it’s much easier to track it and meet your goals–even if you’re convinced that you aren’t making enough to do so. It’s amazing how much the little purchases can add up over a month’s time.

I manage our family’s budget on the day-to-day basis, but the budget was created with my husband’s input. This is hugely important- it has to be done together. I promise you that if only one of you is wholly responsible for managing your family’s finances, there’s a very good chance that the other one either a) doesn’t know what’s going on and/or b) disagrees with what is going on. Neither of those is a good option. I know that it’s difficult to have these types of discussions sometimes, but I promise you that when everything is out in the open and you are both on the same team, you can get more accomplished. There will be fights, but that’s okay. It’s worth it!

The Starting Point

Before I talk about budgeting, I should point out that we are always a month ahead, meaning that the paychecks we receive in January will pay for February’s bills. I started doing this years ago because I liked the feeling of knowing that all of the money for the month was already in the bank, rather than waiting for the mid-month paychecks to pay the rest of the bills.

Our Monthly Budgeting Process

We use a free online program called Every Dollar*. I used to just write our expenses in a notebook each month, but I found that I wasn’t keeping up with it. With Every Dollar, you set your budget up online, and then you can add expenses either on the website or via the iPhone app. Be willing to try out a few different approaches until you find the one that works best for you, whether it’s using software, an app, or plain old pencil and paper.

Here are the budget categories we use each month:

  • Giving
  • Housing
    • Mortgage
    • Phones
    • Gas
    • Electric
    • Cable/Internet (I group these under “Housing” because they are one bill, and we have to have the Internet, because we both work from home)
    • Home Misc. (this is our budget for home repair, home decor, etc.)
  • Transportation
    • Gas
    • EZ Pass
  • Food
    • Groceries
  • Lifestyle
    • Pet Care
    • Individual Misc. (spending money)
    • Gifts
    • Doctor
    • Entertainment (includes dining out, movies, date nights, etc.)
    • YMCA
    • Hulu/Netflix (I don’t put these under Housing, because I view them as more of a want, not a need, like Internet)
    • Daycare
    • Misc. (random, unexpected expenses…we try to keep this as minimal as possible each month)
  • Insurance & Tax
    • Health Insurance
    • Car Insurance
    • Life Insurance
  • Debt
    • Student loans (listed individually on the budget)

Some people choose to break down their budget even further by indicating budgeted amounts for clothing, books, music, etc., or by splitting groceries and dining out. Again, do what works best for you. Right now, these are the categories that work best for us. Sometimes these categories change for us, too. For example, daycare is a new one, and I don’t always include gifts, because some months, we don’t need to buy any. If we are going on vacation, I’ll add a separate line item for that. You just need to stay flexible and recognize that no two months are exactly the same.

The Weekly Check-Up

Although we set up the budget once a month, I don’t recommend updating it only once a month. I typically update the budget once or twice a week. Sometimes I’ll add expenses right when they happen, but more often than not, I sit down a once a week and enter receipts and reconcile our checking account with the budget. It usually only takes 10-15 minutes and it gives me a good idea of how we’re doing at a given point during the month. Then I give my husband an update and let him know if we’re getting close to maxing out any of the categories. At the end of the month, I take anything we have left from categories that we didn’t max out, plus our regular overage, and I either move that to our emergency savings or use it to pay off debt, depending on what our goal is for that month (if we’ve had to use our emergency savings for something, the extra money goes back in to replenish it; otherwise, the extra money goes towards debt).

It might take a few months to get going, but once you do, tracking your money becomes second nature. For us, it has been the single best way to help move us towards our goal of paying off debt.

*I do not receive any type of compensation for recommending Every Dollar. I just think it’s a great tool!



2 thoughts on “This is How We Budget

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